Bitcoin Holds Onto Rate Cut Gains, But Analysts Say $60,000 Is Still a Critical Battleground

Bitcoin on Thursday morning surged past the $62,000 mark, reaching $62,190, a day after the Federal Reserve announced a decisive rate cut.

Meanwhile, Ethereum, although up 5% at $2,435, has underperformed relative to Bitcoin, seeing only a 1% increase over the same two-week period.

This seesaw movement in Bitcoin's price followed a period of volatility triggered by the Fed’s interest rate decision yesterday. Initially, Bitcoin spiked to $61,300 before retreating to $59,400. However, bullish momentum soon took over, pushing the price to $62,500 before slightly retracing.

As the broader cryptocurrency market rose with Bitcoin, it triggered substantial liquidations. Derivatives crypto traders have seen $204.3 million worth of contracts forced to liquidate in the past 24 hours, according to Coinglass data. Of this, $130.5 million were short positions (betting against prices), while $73.8 million were from longs, indicating a market tilt as prices surged.

The Federal Reserve’s rate cut, its first in more than four years, took many on Wall Street by surprise. Most analysts had expected a more modest 25 basis point reduction, but the larger 50 bps cut indicated a more assertive strategy to relax monetary policy, aligning with investor hopes for quicker action amid ongoing economic uncertainty.

In a note sent to Decrypt, Alex Kuptsikevich, senior market analyst at FxPro, said that increased risk appetite in the markets after the Fed's decision helped cryptocurrencies hit highs over the past three weeks.

The crypto market has been moving within a downward corridor since mid-March, and only a surpassing of the recent $2.25 trillion peaks could change this trend, he said.

“The downtrend has been in place since March, and the previous peak of around $64K roughly coincides with the 200-day moving average. We assume that Bitcoin may encounter serious resistance at this level, overcoming which would clear the way up,” Kuptsikevich said.

Chris Aruliah, Head of Institution at Bybit said historically, a rate cut has often led to an influx of capital from banks into the stock market, as lower interest rates drive more investment into riskier assets, including digital currencies.

However, Aruliah also warned of potential challenges posed by economic uncertainty and market fluctuations. What's more, on-chain data also suggests that Bitcoin’s price movement could hinge on the behavior of short-term holders.

Analysis from CryptoQuant highlighted that the average buy price of Bitcoin holders who have held for 1-3 months has historically acted as a key support or resistance level.

Speaking with Decrypt, Avinash Shekhar, co-founder and CEO of Pi42, focused on Bitcoin’s price dynamics around the critical $60,000 level.

“Short-term holders are selling from August, signaling a potential price bottom, while long-term holders are maintaining support above $60,000. This has created a tug-of-war between bulls and bears,” Shekhar said.

He added that further rate cuts could propel Bitcoin forward, making the $60,000 level a critical battleground. "A high above $62K canusher in bullish momentum, while a breakdown below $60K could extend selling pressure."

Edited by Stacy Elliott.