The cryptocurrency market showed significant growth after the first interest rate cut in 4 years by the US Federal Reserve (FRS) by 0.5 percentage points. Bitcoin (BTC) strengthened by 3.5%, reaching $63 thousand by 15:06 Moscow time. Shares of cryptocurrency-related companies also rose, with Coinbase and MicroStrategy each adding 5%. Experts note that the market reaction reflects the complex interaction between monetary policy and digital assets.
Image source: EivindPedersen / Pixabay
The Fed’s decision triggered a massive rally in the markets. Bitcoin, which began to rise even before the announcement, continued its upward trend. The reaction was mixed: the initial jump was followed by a correction. Ethereum (ETH), the second-largest cryptocurrency by market capitalization, gained nearly 5%, reversing its recent underperformance against Bitcoin. The Solana token saw an impressive 7.5% increase, indicating increased interest in alternative crypto assets.
Shares of companies related to the crypto industry also showed positive dynamics. Coinbase, the largest US crypto exchange, rose 5%. MicroStrategy, known for its significant investments in Bitcoin and used as a high-beta vehicle for speculating on the cryptocurrency’s price, also added 5%. These data indicate a growing correlation between the traditional financial sector and the cryptocurrency market.
Image source: TradingView
Investors’ reaction to the Fed’s decision is mixed. Some analysts have expressed concern that such a significant rate cut could signal more serious economic problems than previously thought. Others are focusing on the potential benefits of monetary easing, which could lead to increased liquidity and support rising asset prices, including cryptocurrencies.
Bitcoin exhibits a dual nature, acting both as a hedging instrument and as a risk asset. Its correlation with the Nasdaq Composite Index is currently higher than with gold, indicating the perception of the cryptocurrency as a technology asset. Despite the fact that September is historically considered the least favorable month for Bitcoin, the cryptocurrency has already grown by 6% this year.
Yuya Hasegawa, cryptocurrency market analyst at Japanese exchange Bitbank, warns of possible risks associated with the Bank of Japan (BOJ) meeting: “The BOJ is likely to maintain the current rate, but signs of a possible rate hike could strengthen the yen and trigger a curtailment of the carry market. trade, which could lead to a sell-off on the Japanese stock market. This effect could cascade across the crypto market.” Hasegawa predicts a possible rise in Bitcoin to $65 thousand per coin in the short term.
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