Bitcoin reached a three-week high following a substantial cut in Federal Reserve interest rates, which sent ripples through global markets. As of 10:17 a.m. Thursday in Singapore, the cryptocurrency surged by up to 3.9%, trading at $61,980. The S&P 500 futures and Asian equities also climbed as investors adjusted to the Fed’s anticipated easing cycle.
The Federal Reserve lowered borrowing costs by 50 basis points, marking its first reduction in over four years. However, Fed Chair Jerome Powell tempered expectations by not committing to a similar pace for future cuts, indicating that decisions would depend on forthcoming economic data. This cautious stance somewhat muted the immediate market reaction in US trading hours on Wednesday.
Caroline Mauron, co-founder of Orbit Markets, noted, “An aggressive initiation of the easing cycle is highly favorable for risk assets like Bitcoin. It took the market a few hours to fully appreciate and reflect the positive outlook.”
Ahead of the Fed meeting, there was debate over whether the central bank would implement a 25 or 50 basis point cut. Powell and his team aim to balance the US economy amidst evolving labor market and inflation risks.
David Lawant, head of research at FalconX, observed, “Attention will swiftly shift to the scale and scope of this easing cycle. The key factor to monitor will be the trajectory of economic activity.”
Recent trends show an increasing correlation between cryptocurrencies and traditional assets, such as stocks, suggesting that macroeconomic factors are increasingly impacting digital asset markets, according to Lawant.
In other financial developments, the US dollar remained steady while US Treasuries saw a decline, possibly reflecting Powell’s cautious stance on future monetary easing.
Chris Weston, head of research at Pepperstone Group, commented, “The Fed’s response function remains uncertain. Their path forward is still evolving.”
