and other cryptocurrencies rallied on Wednesday, buoyed amid rising expectations that the Federal Reserve will cut interest rates early next year—a monetary policy move that should be supportive of cryptos.
The price of Bitcoin gained 3% over the past 24 hours to above $38,100, returning to its highest levels since late April and early May 2022, when cryptos plunged into a brutal bear market that has dominated sentiment in the preceding 19 months. Bitcoin has rallied by more than a third since early October, snapping out of a multi-month period of subdued trading and fueling calls of a new crypto bull market.
“Bitcoin has been floundering inside the upward range for more than five weeks now,” said Alex Kuptsikevich, an analyst at broker FxPro. “Bitcoin’s price briefly exceeded $38,400 but pulled back down after failing to find solid ground to accelerate gains.”
Bitcoin’s big rally has come on the back of hopes that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF), a move that would be expected to usher in a fresh wave of investor interest in digital assets. The improving macroeconomic backdrop has also helped.
Indeed, after falling from the $38,000 zone earlier this week, Bitcoin bounced back amid rising expectations that interest rates have reached their peak and could come down as soon as next March. Like the stock market’s
Dow Jones Industrial Average
—which have also rallied—Bitcoin should benefit from lower rates, which make riskier bets like tech stocks and tokens more attractive than in a higher rate environment, when returns on risk-free government debt are elevated.
The latest catalyst for a shift in rate expectations was remarks from Fed governor Christopher Waller on Tuesday, who said he was “increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2%,” which is the Fed’s target. Waller’s words have seen traders move to price in a fall in borrowing costs sooner rather than later, with the odds that rates come down by the Fed’s policy meeting in March rising to 43% on Wednesday, up from below 35% on Tuesday, according to the CME FedWatch Tool.
—the second-largest crypto—rose 1.5% to $2,050. Smaller tokens or altcoins also gained, with
up 2% each. Memecoins were similarly higher, with
jumping 3% and
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