Since the green light arrived for Bitcoin ETFs, the crypto market has been trading in a range. Apart from the large-scale consolidation phase, cooling investor sentiment and market uncertainty are negatively impacting digital asset shares. Despite rising sentiment, Wall Street remains bullish on the stock market. Changes in sentiment can cause the cryptocurrency market to rise and move higher.
Wall Street turns bullish on stocks even as bets on interest rate cuts fade
According to a report from Yahoo Finance, various securities and financial companies have taken a bullish view on the stock market. The move came despite concerns about delays in lowering interest rates by the US Federal Reserve.
The Federal Open Market Committee previously decided at its January meeting to keep the range for the federal funds rate unchanged at 5.25% to 5.5%. This decision was largely in line with market expectations. The market had priced in a nearly 96% chance that the Fed would keep interest rates unchanged, according to the CME FedWatch tool.
Meanwhile, the Fed noted that recent data appears to show that U.S. economic activity is steadily growing. Although employment growth has slowed since the beginning of the year, it remains substantial and unemployment is low. The Fed's report's main finding was that although inflation has declined over the past year, it remains high.
However, a report from Yahoo Finance shows that positive economic news should not be interpreted as “bad” just because it may signal an impending interest rate hike by the Federal Reserve. Rather, positive economic news indicates that business activity is increasing, which is great for the stock market. And that's usually good news for investors in the long run.
Cryptocurrency market to thrive as sentiment grows
Investor sentiment has always influenced the value of cryptocurrencies. The Federal Reserve's interest rate decisions have long been a key metric used by investors to evaluate investments. Lower interest rates often reduce the value of government securities and make assets such as cryptocurrencies more attractive.
Global financial markets are currently anticipating interest rate cuts soon. However, the resilience of economic indicators at this point suggests that the economy has not yet recovered sufficiently to allow for significant rate cuts. Despite the negative implications, the positive outlook for stock markets and general financial markets will certainly increase investors' risk appetite.
Rising sentiment and falling volatility could push the crypto market toward a near-term bull run. Cryptocurrency prices, which are currently under pressure, could rise due to positive events in the future, such as the Bitcoin halving, possible approval of an Ethereum ETF, or even the upcoming earnings season.
Current market outlook and expectations
The cryptocurrency market is largely operational for the next year. CoinGape previously reported that various institutions are betting that the price of OG crypto will rise in the future. This includes Bitwise's prediction that the price of Bitcoin will exceed $80,000 in 2024. According to Coinbase, institutional investment in Bitcoin will remain the main focus for at least the first half of 2024.
Although Bitcoin is not the only cryptocurrency, it remains the most widely known and distributed. Rising Bitcoin prices typically pave the way for improved prospects for the larger crypto asset market.
Currently, the market mood is noticeably bullish for the cryptocurrency space. This takes into account two signals of lower interest rates in the US: the upcoming Bitcoin halving in April, increased market liquidity, and evolving regulatory developments.
