Bitcoin Reaches Three-Week High as Federal Reserve Rate Cut Boosts Appetite for Risk
Bitcoin hits a three-week high following the Federal Reserve's larger-than-expected rate cut. Learn how the Fed's decision is impacting Bitcoin and global markets
Bitcoin surged to a three-week high, mirroring gains in global stocks, as the U.S. Federal Reserve's larger-than-expected interest-rate cut fueled demand for riskier assets. The digital currency climbed by as much as 4.9%, trading at $62,800 by Thursday morning in New York. Global equities also experienced an uptick, with traders reacting to the Fed's easing cycle.
Federal Reserve's Rate Cut Sparks Market Movement
The Fed reduced its benchmark borrowing rate by 50 basis points, marking its first cut in more than four years. While the reduction was significant, Fed Chair Jerome Powell was cautious, stating that future moves would depend on economic data, tempering market reactions during U.S. trading hours on Wednesday.
Caroline Mauron, co-founder of Orbit Markets, noted, "An aggressive start to the easing cycle is excellent news for risky assets, including Bitcoin. It took the market a few hours to fully grasp the broader impact and start reflecting this improved outlook."
Uncertainty Ahead for Future Fed Decisions
Before the Fed meeting, opinions were divided on whether the central bank would implement a quarter-point or half-point cut. Powell and his team are trying to maintain economic strength while balancing concerns about the labor market and inflation. David Lawant, head of research at FalconX, highlighted the significance of tracking economic activity, noting that the future of this easing cycle will be closely watched.
Bitcoin's Correlation With Traditional Markets Grows
Recent trends show a stronger correlation between Bitcoin and traditional financial assets like stocks. Lawant emphasized that macroeconomic factors, such as Federal Reserve policies, are increasingly influencing the digital asset market.
Meanwhile, U.S. Treasury yields dipped slightly, reflecting uncertainty regarding Powell’s statements on the extent of future rate cuts. Chris Weston, head of research at Pepperstone Group, commented, “The Fed’s ongoing path remains unclear, and markets are adjusting to this unscripted approach.”
Also Read: Bitcoin Could Hit $100,000 Soon as Global Money Flow Increases
