Bitcoin's price surged above $63,000 after Fed Chair Jerome Powell announced the central bank's decision to cut interest rates for the first time in four years.
Bitcoin Price Surge
The news sent shockwaves through the cryptocurrency market. Analysts predict that the world’s largest cryptocurrency by market cap could see a new all-time high. “There is a significant chance that we could see a price pump throughout the rest of the year and even push Bitcoin towards a new all-time high,” said Alice Liu, principal researcher at CoinMarketCap.
Fed's Rate Cut Decision
The Fed decided to cut interest rates by 0.5% to between 4.75% and 5% to stimulate the economy as inflation cools. Powell emphasized that the U.S. economy continues to stand on solid foundations and that this move is expected to encourage investment in riskier assets such as stocks and cryptocurrencies by lowering borrowing costs.
Prospects and Risks
Bitcoin’s price movements are closely tied to liquidity conditions, and lower interest rates typically lead to increased liquidity. “Bitcoin is highly correlated to its liquidity environment, and this should support higher Bitcoin prices through the end of the year and beyond,” said Steven Lubka, head of Swan Private at Swan Bitcoin. If Bitcoin breaks its all-time high of $73,000, it could further boost the entire crypto sector. However, market analysts warn that uncertainty surrounding the upcoming US elections could create volatility.
Despite potential political hurdles, monetary policy provides positive tailwinds, making Bitcoin a strong option.
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