Bitcoin surges to one-month high following Federal Reserve rate adjustments

Bitcoin Prices Surge to One-Month High

Bitcoin stood out as it surged to one-month highs on Monday, continuing its rally following last week’s substantial rate cut by the Federal Reserve. Meanwhile, the yen fell further in markets that were quieter due to a Japanese holiday. By 12:27 pm IST, Bitcoin had climbed 1.3% to $63,703, and Ethereum had risen by 3% to $2,656. Other notable increases included BNB up 1.9%, Solana up 0.3%, Toncoin surging 1%, Cardano rising 1.3%, Avalanche gaining 2.2%, and NEAR Protocol jumping 9%.

What’s Behind the Rally?

“Bitcoin is at a crucial point. A major surge could begin if it closes above $70,000. If it fails to close above that level, it might drop toward $60,000. Currently, Bitcoin is trading just above $64,200. Ethereum is bouncing off a critical support level against Bitcoin, raising the question of whether this could be a reversal for ETH—we’ll have to wait and see. XRP’s recent breakthrough looks promising, and Solana narrowly avoided a serious fall by bouncing off support last week. The global crypto market cap stands at $2.23 trillion, a 0.97% increase over the last day,” said Avinash Shekhar, Co-Founder & CEO, Pi42.

Last week, the Bank of Japan (BOJ) decided to keep interest rates steady and suggested there was no immediate plan to raise them. This move, made shortly after the Fed’s 50 basis points rate cut, halted the yen’s significant appreciation this month, which has seen a 1.4 per cent increase in September. With Japan observing the Autumnal Equinox Day, the primary focus of trading shifted to expectations of additional Fed rate cuts and the resulting gains in equities, commodity currencies, and other risk assets.

Goldman Sachs said in a report that the Fed’s rate cut seems to have eased market concerns about a potential U.S. recession. “Our G10 FX team expect a slight rebound for the U.S. dollar over the next 3 months, before easing again on a 6- and 12-month view,” the firm said. Fed futures traders are anticipating 75 basis points of rate cuts by the end of this year and nearly 200 basis points by December 2025, which would lower the Fed’s policy rate to 2.75 per cent by the end of next year, according to CME FedWatch. Following the Fed’s recent rate cut, the U.S. Treasury yield curve has been steepening. Investors have increased their bets on a substantial second rate cut after Fed Governor Christopher Waller expressed concerns on Friday that inflation might fall significantly below the central bank’s 2 per cent target.