After the Federal Reserve surprised markets by sounding less hawkish than anticipated, the price of bitcoin surged on Thursday. Other cryptocurrencies also saw gains as the dollar declined and traders bet against any more interest rate hikes.
The world’s largest cryptocurrency by market capital rose nearly 4% to $35,808, hitting its highest level since May 2022. World no. 2 crypto ethereum rose 3% to $1,866.19- a near three-month high.
The crypto market was largely encouraged by a weaker dollar and sinking yields, after the Federal Reserve kept interest rates steady on Wednesday, as widely expected. The dollar index slid over 0.5% in Asian trade on Thursday.
Fed Chair Jerome Powell struck a seemingly less hawkish tone on future rate hikes. While he still left the door open for one more rate hike this year, Powell also acknowledged that monetary conditions had tightened substantially in recent months. Markets took this as a signal that the Fed may not hike rates any further, and could potentially begin cutting rates by mid-2024.
This notion saw traders pivot out of the dollar and into risk-driven assets, benefiting cryptocurrencies.
Bitcoin crossed the $35,000 mark for the first time since May 2022. A series of high-profile bankruptcies in the crypto market- including Terra, Three Arrows Capital and most notably FTX, had triggered deep declines in crypto prices over the past year. The world’s largest crypto token had sunk to as low as $15,000 in late-2022.
But the token has been on a tear in recent weeks, benefiting greatly from speculation that an exchange-traded fund that directly tracks the price of bitcoin will soon be approved in U.S. markets.
Applications from Grayscale, Ark Ventures, and most notably- world no.1 asset manager BlackRock Inc (NYSE:BLK), are under consideration by the Securities and Exchange Commission.
