Cryptocurrency Market Surges As Federal Reserve Signals Rate Cuts
Investors react positively to the Fed’s decision to keep interest rates unchanged, lifting major cryptocurrencies.
The cryptocurrency market experienced a notable surge on Thursday, buoyed by renewed investor confidence following the U.S. Federal Reserve’s indication that it anticipates two rate cuts later this year. The Fed’s decision to maintain interest rates on hold has led to a wave of optimism as major cryptocurrencies like Bitcoin and Ether saw substantial gains.
Federal Reserve’s Decision
On Wednesday, the Federal Reserve opted to leave interest rates unchanged, a move that had been widely anticipated by market analysts. Despite this stability, policymakers did raise their inflation forecasts and adjusted economic growth expectations downward, citing risks associated with U.S. President Donald Trump’s tariff policies.
However, the market reacted favorably to the Fed’s updated "dot plot," which outlines future interest rate expectations. Fed Chair Jerome Powell’s comments suggesting that inflation resulting from tariffs will be “transitory” and largely confined to this year further strengthened market sentiment. As a direct consequence, major stocks and cryptocurrencies rose, while U.S. Treasury yields and the dollar faced a decline.
Cryptocurrency Gains
As of 10:36 AM IST, Bitcoin saw an impressive rise of 3.25%, trading at $85,659, while Ethereum advanced nearly 4.5% to $2,020. The total global cryptocurrency market capitalization surged by 3.4% in the past 24 hours, reaching approximately $2.81 trillion.
Edul Patel, Co-founder and CEO of Mudrex, remarked, "The crypto market got a huge boost as the Fed kept rates unchanged, signaling two cuts this year. The pause in quantitative tightening further strengthens market sentiment. Bitcoin, currently near $86,000, could aim for $90,000 if momentum holds."
Shivam Thakral, CEO of BuyUcoin, echoed this sentiment, noting that Bitcoin’s price movement has been strongly influenced by the Fed’s decision, with the cryptocurrency reaching an intraday high of roughly $85,950 over the past day.
Altcoin Performance
The altcoin market also saw positive results, with notable gains recorded across various cryptocurrencies. XRP experienced a significant rise of 7.5%, while Solana increased by 5.7%. Other cryptocurrencies such as Cardano rose by 2.7%, and Dogecoin saw an increase of 3.8%. Additional gains were noted for Chainlink, Toncoin, Hedera, and Stellar, all of which experienced price increases ranging from 2% to 5%.
Regulatory Developments
In a pivotal regulatory development, the U.S. Securities and Exchange Commission (SEC) officially dropped its lawsuit against Ripple Labs. This decision had a direct impact on XRP’s value, propelling its price to nearly $2.5, according to CoinSwitch Markets Desk.
Bitcoin’s market capitalization climbed to $1.7 trillion, establishing its dominance at 60.6%. The cryptocurrency’s 24-hour trading volume surged by 53% to $37.33 billion. Notably, stablecoin volumes accounted for an impressive 94.17% of total crypto trading, amounting to $97.91 billion, as reported by CoinMarketCap.
Looking Ahead
Technical indicators appear to signal bullish momentum for Bitcoin, with market analysts suggesting potential targets around $96,000. However, caution is advised, as a "sell-the-news" event could trigger a price pullback to $80,000, especially if significant holders (whales) begin to exit their positions. A failure to surpass the $90,000 threshold could lead to a retracement, with key support identified at $76,606. Despite these potential risks, the overall market sentiment remains optimistic, bolstered by ongoing institutional accumulation and growth in exchange-traded funds (ETFs).
Disclaimer
The opinions and insights provided by experts referenced in this article are their own and do not necessarily reflect the views of the Economic Times.
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