Bitcoin jumped 7.9% to $66,540.9 by 01:09 ET (05:09 GMT), after sinking as low as $60,000 on Wednesday. The world’s largest cryptocurrency was walloped by a heavy bout of profit-taking before the Fed, after it raced to record highs last week.
Weakness in the dollar aided Bitcoin’s recovery, as the greenback fell sharply from two-week highs after the Fed. This trend also supported the broader cryptocurrency market, with world no.2 token Ethereum rising 10% on Thursday to $3,454.79.
The Fed stuck to its forecast of a 75 basis point reduction in interest rates in 2024, while Chair Jerome Powell also flagged more, albeit slow progress towards the Fed’s 2% annual inflation target.
Lower interest rates bode well for Bitcoin, which benefits from a high-liquidity environment that encourages speculative investments. The token’s bull run in 2021 came largely on the back of ultra-low interest rates in the wake of the COVID-19 pandemic.
Bitcoin is already up more than 50% so far in 2024, after a stellar, over 100% rally through 2023. The token’s latest gains were driven by increased capital inflows after the approval of spot exchange-traded funds for U.S. markets earlier in 2024.
The spot ETFs make investing in Bitcoin much simpler for traditional investors. This ease of access, coupled with potentially lower interest rates, could prime Bitcoin for a rally later in 2024.
Analysts expect the token to cross the $100,000 level by end-2024.
But Bitcoin and the broader crypto industry still has to grapple with a marked loss of faith, following a string of high-profile frauds and scandals over the past two years.
The token’s perceived volatility also makes it appear less attractive to risk-averse investors.
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