Bitcoin surged on Friday, posting weekly gains of 10% and approaching $64,000. This came as the Bank of Japan kept its monetary policy unchanged, sparing markets a repeat of the August crash after raising interest rates. The results were positive for markets after the Federal Reserve made a major interest rate cut. In the last 24 hours, Bitcoin rose more than 2% to $63,544, while Ethereum rose 5.66% to $2,555.
The US central bank cut borrowing costs by 50 basis points, the first cut in four years. However, Federal Reserve Chairman Jerome Powell indicated that future cuts depend on economic data. The beginning of monetary easing is positive news for riskier assets like Bitcoin, as the market took some time to understand and adapt to the situation, the currency market economist said.
Monetary policy faces significant challenges ahead. Before the Fed meeting, opinions differed about whether to cut interest rates by a quarter or half a percentage point. Powell and his colleagues are seeking to maintain the stability of the US economy, which makes it more difficult to balance the labor market and inflation.
A senior economist indicated that the focus will quickly shift to the size and extent of the easing cycle, with monitoring the path of economic activity a key factor. The relationship between cryptocurrencies and traditional markets, such as stocks, is increasing, which means that macroeconomic variables are having a greater impact on digital asset markets, as Loant pointed out. In a note, the head of research at the currency market Forex wrote that the Fed’s future response remains unclear, as it follows an undefined approach.
Cryptocurrency prices rose in general
Yesterday, Bitcoin’s price recorded a rise after the Federal Reserve cut interest rates significantly, indicating the start of the easing cycle. However, gains were limited due to the less optimistic outlook. The leading cryptocurrency rose 2.9% to $62,121, breaking out of a trading range between $50,000 and $60,000. Bitcoin’s ability to sustain this breakout during the closing of the four-hour candle, the day, and the week will be monitored to ensure an upside trend. So far, Bitcoin has gained more than 7% on a weekly basis, while Ethereum has gained 4.6% to $2,438.37.
After the rate cut decision, crypto prices have generally risen, but the strength of the US dollar index has weighed on gains. Bitcoin has followed the positive trend for riskier assets, with the Federal Reserve cutting by 50 basis points, marking the start of its first easing cycle since 2020. Jerome Powell pointed to the balance of risks between rising inflation and a weaker labor market, and stated that the Fed has no intention of cutting interest rates to very low levels, which strengthens the value of the dollar.
Crypto optimism: Macroeconomic data also points to optimism for riskier bets, such as Bitcoin, in the coming months. Open interest data from CoinGlass shows a surge of about $5 billion in Bitcoin bets since Tuesday, suggesting new money is quickly entering the market in anticipation of increased volatility.
Solana rose about 7% to lead the gains, while Avalanche (AVAX), Aptos (APT) and MTMX (IMX) jumped about 12%. Also, meme coins, led by BONK (BONK), surged about 10%, suggesting a return to risk-on behavior.
Crypto Bubble
Less encouraging news about Bitcoin’s recent rally is back, despite the excitement surrounding ETFs. The irony here is that there’s nothing new; the old speculation continues, with old tools and companies gearing up to buy more cryptocurrency, despite threats to corporate revenues and the risks that have plagued crypto markets, including the worsening of capital flight in emerging markets, remain.
Nigeria estimates that $26 billion in untraceable crypto payments passed through a local subsidiary of Binance last year. Weakest month: September has historically been a bearish month for Bitcoin, but the declines could pave the way for a potential rally in the fourth quarter, analysts said. Analysts have indicated that the upcoming uptrend for Bitcoin could be better than expected, especially after the Federal Reserve cut interest rates.
With Bitcoin recording some gains during September, analysts have noted unexpected price increases that have prompted investors to reevaluate their strategies for the rest of the year. Typically, interest rate cuts weaken the dollar, making alternative assets like Bitcoin more attractive to investors looking for protection from inflation and currency depreciation. Additionally, the strong performance of US stocks boosts investor confidence, which could also extend to the cryptocurrency market.
The strongest month: Analysts have explained that October is typically the strongest month for Bitcoin, which could help it approach its previous historical peak. Bitcoin recorded its all-time high on March 14, when it rose to $73.75 thousand, while today it is down 20%.
The analysts have indicated that the strong performance of US stock markets will support Bitcoin’s performance and rise from October until the end of the fourth quarter. Historically, October is the strongest month for Bitcoin, and investors who know this trend will see any price decline this month as an opportunity to accumulate or expand their positions.
