Bitcoin Price Surge Following Fed Rate Cut

Bitcoin Price- Bitcoin Surges Over 6%: What Influenced the Recent Price Rally?

Bitcoin Price– Bitcoin’s price has experienced a remarkable rise of over 6% since the U.S. Federal Reserve announced a 50 basis-point cut to its Federal Funds rate earlier this week. This surge saw Bitcoin reaching a high of $63,800 during early Friday trading. This rally follows a brief dip to around $57,500 at the beginning of the week.

Impact of the Fed’s Policy Changes

In addition to the Fed’s rate cut, Bitcoin has gained support from a weakening Japanese yen. Derivatives trader Gordon Grant noted that the U.S. dollar has strengthened against the yen since Monday, which has contributed to Bitcoin’s upward momentum. A stronger dollar relative to the yen historically supports higher-risk assets, as the yen is commonly used as a funding currency for riskier trades. Grant emphasized that this dynamic benefits Bitcoin, allowing it to flourish amid these currency fluctuations.

The Role of the Yen’s Weakness

According to Grant, the current weakness of the yen against the dollar plays a significant role in the market. He remarked, The plus 1% strengthening of the dollar uniquely against the yen has accommodated an appreciation in assets like gold, silver, and also Bitcoin. He added that while Bitcoin can act as a short dollar proxy—gaining value when the dollar weakens—it also behaves like a high-beta asset, typically rising when broader market risk sentiment improves.

Bank of Japan’s Hesitation to Raise Rates

The macroeconomic environment, characterized by a strengthening dollar and weakening yen, was further reinforced on Friday. The Bank of Japan appeared hesitant to commit to raising interest rates, opting to keep its policy rate unchanged at 0.25%. Although the BoJ previously indicated intentions to continue raising rates if inflation followed its projected path, it chose to maintain rates despite expectations of rising Consumer Price Index inflation in 2025.

Mixed Opinions on Bitcoin’s Future

Following the Federal Reserve’s recent rate cut, analysts have expressed divergent views on Bitcoin’s short- and long-term price prospects. The rate cut, signaling a potential easing of economic conditions, could significantly impact Bitcoin in the coming weeks and months. However, interpretations of its effects vary widely.

Short-Term Market Volatility

21Shares Crypto Research Strategist Matt Mena shared in an email to The Block that the rate cut could lead to near-term market volatility. In the short term, the 50 basis-point rate cut could signal to the market that the economy is slowing, hinting at underlying issues that may not yet be apparent. This could unsettle both traditional and digital investors, potentially triggering initial volatility. However, over the long term, Bitcoin and other digital assets have historically thrived in low-interest-rate environments, Mena explained.

Cautious Long-Term Outlook

Conversely, BRN analyst Valentin Fournier offered a more cautious longer-term perspective. Technical indicators suggest that Bitcoin’s upward momentum may be nearing its peak. The price is approaching the upper Bollinger Bands, and the Stochastic RSI is signaling a potential trend reversal.

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