On Monday, Bitcoin traded just shy of its one-month high, following the U.S. Federal Reserve's rate hike decision last week in crypto and expanding stocks, including risk assets.
The Fed cut its benchmark interest rate by 50 basis points on Wednesday, more than a quarter of a percentage point cut by economists. It also marked the first time the central bank has cut interest rates. four years.
Crypto analysts welcomed the move as a positive boost to market activity, especially as bitcoin, a key market indicator, failed to recapture its March all-time high of over $73,800 this year.
The asset is up 2% on the day to $64,000, the highest point since August 26, CoinGecko data shows.
Matthew Graham, managing partner at Ryze Labs, said: “In this context, as crypto is essentially an asset class exposed to assets, in our view, the move to a lower interest rate regime makes a lot of sense. “Over the past several years, crypto prices, including Bitcoin, have been more influenced by global macroeconomic conditions than any other single factor.
By adjusting the federal funds rate, the Fed aims to control inflation, promote employment, and maintain economic stability. The central bank is hoping to walk a fine line between overstimulating the economy, leading to another high rate of inflation, and significantly reducing inflation.
As the US Fed begins its cutting cycle, Bank of Japan On Friday, he voted to leave interest rates unchanged. At the same time, the Bank of England announced that it was pausing its rate cut, opting for a “gradual approach” following its first rate cut in August.
Central bank interest rate decisions affect liquidity and investor behavior, which in turn affects how much capital flows into cryptocurrencies and speculative assets. As other banks hold or freeze, different policies can cause volatility in the crypto market or create uncertainty that can halt price growth.
With much of the devaluation-related euphoria and speculation now in hindsight, crypto prices may be taking a “breather,” QCP Capital wrote in a short investor note. Note Friday night.
The Singapore-based digital asset trading firm interpreted the recent volatility in Bitcoin options contracts as the market's response to “policy normalization” ahead.
A drop in volatility usually reflects very small price changes and suggests that traders are not expecting any changes in the near future.
Daily Debrief Newspaper
Start every day with top news stories, plus original features, podcasts, videos and more.
