Bitcoin extended its recent gains on Thursday, climbing above $117,000 (£85,840) following a landmark decision by the Federal Reserve to cut interest rates by 25 basis points. This marks the first rate reduction in nine months and comes as the world’s largest digital asset achieved its highest value since August 17. The development broke a week-long period of price stability and boosted the overall cryptocurrency market amid the Fed’s shift towards a more dovish monetary policy.
Investors were keenly analyzing remarks from Fed Chair Jerome Powell, which suggested the possibility of further interest rate reductions in the coming year. The Federal Open Market Committee (FOMC) voted decisively with an 11-1 majority in favor of the cut, although dissent came from Trump ally Stephen Miran, who advocated for a more significant half-point reduction. The Fed’s updated projections indicate the possibility of two additional cuts within the year, potentially setting the federal funds target range to between 3.50% and 3.75% by December.
In the context of these macroeconomic shifts, some crypto investors noted a seasonal trend that historically benefits Bitcoin during this time of year. Entrepreneur and influencer Lark Davis pointed out on X that since 2020, every September Federal Open Market Committee meeting—except during last year’s bear market—has set the stage for significant increases in Bitcoin’s price. He emphasized the importance of seasonality, claiming that “Uptober is real.”
The enthusiasm surrounding Bitcoin also positively impacted other major cryptocurrencies. Ethereum experienced a modest gain of 1% over the past 24 hours, although it remains constrained within a four-week range below the $4,900 mark. Dogecoin and Binance’s BNB token both surged over 4%, while XRP saw nearly a 3% increase following what appeared to be a bullish breakout pattern. Solana experienced a temporary rise to just above $245, driven by optimism surrounding CME Group’s upcoming launch of SOL and XRP options on October 13, which is anticipated to invite more institutional involvement.
Despite the overall positive sentiment in the cryptocurrency market, some analysts approached the Fed’s rate cut with caution. Jai Kedia, a research fellow at the Cato Institute, highlighted that while the weakening labor market influenced the FOMC’s decision, recent data indicates persistent inflation that exceeds the Fed’s 2% target. He argued that conventional monetary policy guidelines would suggest maintaining rates or even implementing a slight increase.
Fabian Dori, head of investments at Sygnum Bank, echoed this sentiment and pointed out the complexities ahead. “The underlying dynamics remain complex,” he noted. “While the US labor market is showing signs of weakness, inflation appears to be persistent, and recent purchasing managers’ index readings indicate a potential re-acceleration in business activities. Conversely, easing producer price inflation presents conflicting economic signals.”
As the market reacts to these developments, analysts and investors alike remain vigilant in navigating the ever-changing landscape of cryptocurrencies and macroeconomic factors.
