Bitcoin rose to a three-week high, mirroring gains in global stocks, as the US Federal Reserve’s bigger-than-expected interest rate cut boosted demand for riskier assets. The digital currency rose as much as 4.9%, trading at $62,800 on Thursday morning in New York. Global stocks also saw a rally, with traders reacting to the Federal Reserve’s easing cycle.
Federal Reserve rate cut sparks market movement
The Federal Reserve cut its benchmark borrowing rate by 50 basis points, marking its first cut in more than four years. While the reduction was significant, Federal Reserve Chairman Jerome Powell remained cautious and stated that future moves would depend on economic data, tempering market reactions during US trading hours on Wednesday.
Caroline Mauron, co-founder of Orbit Markets, noted: “An aggressive start to the easing cycle is excellent news for risk assets, including Bitcoin. It took a few hours for the market to fully understand the broader impact and begin to reflect this improved outlook.”
Uncertainty for future decisions of the Federal Reserve
Before the Federal Reserve meeting, opinions were divided on whether the central bank would implement a quarter-point or half-point cut. Powell and his team are trying to maintain economic strength while balancing concerns about the labor market and inflation. David Lawant, head of research at FalconX, highlighted the importance of tracking economic activity and noted that the future of this easing cycle will be closely watched.
Bitcoin’s correlation with traditional markets grows
Recent trends show a stronger correlation between Bitcoin and traditional financial assets like stocks. Lawant emphasized that macroeconomic factors, such as the Federal Reserve’s policies, are increasingly influencing the digital asset market.
Meanwhile, US Treasury yields fell slightly, reflecting uncertainty over Powell’s remarks on the scope of future rate cuts. Chris Weston, head of research at Pepperstone Group, commented: “The Federal Reserve’s current path remains unclear and markets are adjusting to this improvised approach.”
Also read: Bitcoin Could Hit $100,000 Soon as Global Money Flow Increases