Zinger Key Points
- Historically, gold performs well during Fed rate-cutting cycles, suggesting Bitcoin might similarly benefit as digital gold.
- Bitcoin experienced a sharp 3% sell-off during the last hour of July trading, likely due to institutional rebalancing.
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As gold GOLD prices trade near record heights fueled by expectations of a potential Federal Reserve rate cut, the precious metal’s performance could be a harbinger for Bitcoin BTC/USD, often referred to as “digital gold.”
What Happened: While the Federal Reserve maintained a cautious stance on interest rate adjustments in its latest statement, Chair Jerome Powell's comments during the subsequent Q&A hinted at a potential rate cut in September, contingent on a continued decline in inflation.
Historically, gold has exhibited strong performance during rate-cutting cycles, and given Bitcoin’s reputation as a digital counterpart, its price is expected to follow suit, according to a new 10x Research report.
However, the report cautions that the market may require additional time to fully reflect this correlation.
Also Read: Bitcoin’s Joined The Big Leagues, But: ‘We’re Not Bullish Enough,’ Says Bitwise CIO Matt Hougan
Despite the overall positive outlook, Bitcoin experienced a sudden sell-off in the final hours of July.
While some attributed this to political factors, the report suggests it was more likely due to institutional investor rebalancing and month-end profit-taking.
The report posits that the recent sell-off is likely temporary and should not overshadow the broader bullish sentiment underpinned by gold’s performance and the potential for a rate cut.
As the market awaits the release of the inflation report on August 14, all eyes will be on the Federal Reserve’s next moves.
The potential for a rate-cutting cycle could be a game-changer for both gold and Bitcoin, setting the stage for a potentially exciting period for investors.
To delve deeper into the intricacies of the digital asset landscape and explore the implications of these developments, be sure to attend Benzinga’s Future of Digital Assets event on Nov. 19.
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