Global monetary policy deceleration could boost Bitcoin prospects, says Binance Research
According to Binance Research, Bitcoin may gain momentum as worldwide central bank tightening decelerates, despite market expectations of a Fed rate increase in December.
According to a Tuesday statement from Binance Research, Bitcoin may discover upward momentum ahead of significant central bank rate reductions, provided the pace of interest rate increases continues its deceleration trend.
In a report provided to Cointelegraph on Tuesday, Binance Research indicated that within the last half-year period, rate increases had been implemented by eight out of ten central banks under their monitoring umbrella, with Sweden's Nov. 4 announcement being among them, while the intensity of monetary tightening has been diminishing since reaching its peak in July, according to Binance Research.
"The continuation of this deceleration pattern through the first quarter of 2027 will be critical in assessing whether macroeconomic conditions are becoming more favorable for the cryptocurrency sector," according to the report.
The research from Binance highlighted patterns from the prior market cycle. The cryptocurrency Bitcoin (BTC) reached its lowest point in November 2022, with its half-year performance shifting into positive territory by February 2023, preceding any rate reduction actions by central banking institutions included in their tracking index.
In a parallel scenario during 2024, Bitcoin achieved what Binance characterized as its "strongest" half-year performance of the entire cycle, surpassing 160% returns by March, amid ongoing monetary tightening initiatives, according to Binance.
"BTC responded to the trajectory of worldwide monetary policy rather than its absolute position in both instances," the research document states.
December rate hike odds mount following Waller's speech
The possibility of an additional US interest rate adjustment remains on the table. On Tuesday, Christopher Waller, a Federal Reserve Governor, indicated his inclination toward implementing a quarter-point rate increase in December, while also expressing willingness to entertain a half-point adjustment should core inflation figures persist at elevated levels. The probability of a 25-basis-point December rate hike climbed from 76.3% to 96.3% on Tuesday, based on data from CME Group's FedWatch Tool.
A Nov. 2 analysis from Bitwise similarly contended that declining economic growth projections might ultimately encourage central banking authorities to shift direction toward monetary easing policies, which could establish more advantageous conditions for Bitcoin's performance.
Over the preceding seven-day period, Bitcoin's value decreased by 3.5%, compounding its twelve-month downturn to 30%. Based on CoinMarketCap data, the pioneering cryptocurrency was changing hands at $74,131, representing a 41% discount from its record peak of $126,198.