Bitcoin has gained nearly 3% to reach the $62k mark after the US Federal Reserve announced a 50 basis point rate cut on Wednesday.
Bitcoin’s rally is accompanied by a sharp upsurge in prices of leading altcoins, including Solana and Ethereum. Solana is up nearly 6% in the last 24 hours, while Ethereum jumped 4.7% day-on-day.
Avalanche posted the largest gains following the rate cut by the Federal Open Market Committee (FOMC), with AVAX’s price up by nearly 11% in 24 hours.
The two-day FOMC meeting concluded on Wednesday. The central bank cut the lending rate to a range of 4.75% to 5.00% from 5.25% to 5.50%. This is the first rate cut in four years, with the last one announced on March 15, 2020.
At a press conference following the FOMC meet, US Fed Chair Jerome Powell reiterated that the economy is strong and that rising inflation has come down significantly.
“Our economy is strong overall and has made significant progress toward our goals over the past two years. The labor market has cooled from its formerly overheated state. Inflation has eased substantially from its peak of 7 percent to an estimated 2.2 percent in August,” he explained.
Crypto Market Welcomes the Rate Cut
Following the rate cut, there was a sharp rise in the prices of leading cryptocurrencies. While the week started with high volatility amid speculation about the rate cut, the past 24 hours have seen sustained bullish momentum in the prices of top cryptocurrencies by market cap.
A few leading analysts had predicted that the FOMC would not announce rate cuts as expected by the market. However, contrary to that speculation, the FOMC decided to cut interest rates by 50 basis points instead of 25.
Bitcoin, which fell back to $58k after crossing the $61k mark earlier this week, experienced high volatility due to uncertainty over the rate cut. Now that the rate cut aligns with market expectations, we also saw moderate bullish momentum in US stock indices on Wednesday.
Will The Bullish Momentum Continue?
After four weeks of struggle, the crypto market has seen sustained bullish momentum this week. The Fed’s rate cut announcement pushed Bitcoin beyond the $60k mark, where it continues to hold above strong resistance at $59.3k.
A 50 basis point rate cut will likely provide investors with confidence, and we may see fresh funds flowing into the market. While Bitcoin has not been able to surpass $63k in the past four weeks, it hasn’t dropped below $50k, as some had anticipated.
However, it is unlikely that we will see a new all-time high for Bitcoin in September. The US election is a major event, and if Bitcoin tests the next resistance around $65k, we might see some profit-taking.
