Bitcoin’s Value Surges after Federal Reserve’s Interest Rate Adjustment
Bitcoin’s value soared to its highest point in a month after the recent substantial interest rate cut by the Federal Reserve. While most major currencies remained stable due to the closure of Japanese markets, the U.S. dollar gained strength against the yen, hitting a two-week high.
The Bank of Japan decided to keep interest rates unchanged last week, signaling a lack of urgency for future rate increases. This, combined with the Federal Reserve’s rate cut, halted the yen’s recent gains. With Japan observing Autumnal Equinox Day, market activities were mainly guided by speculations about additional rate cuts by the Federal Reserve and the resulting uptick in risk-related assets.
Bitcoin increased to over $63,200, staying close to its highest value in a month, while the Australian dollar held firm around $0.68. The U.S. dollar index saw a slight rise to 100.8, remaining above the low it recently touched for the year.
Goldman Sachs highlighted that the Federal Reserve’s rate cut has allayed fears of a U.S. recession, predicting a modest recovery in the U.S. dollar over the next three months. Traders in Fed futures have factored in 75 basis points in rate cuts by the year-end, anticipating further adjustments by December 2025.
Following the rate cut by the Federal Reserve, the U.S. Treasury yield curve has steepened, with investors leaning towards the likelihood of an additional substantial rate cut following statements by Fed Governor Christopher Waller. Economists surveyed by Reuters anticipate two more 25 basis points rate cuts at the remaining Federal Reserve meetings this year.
The upcoming ruling party election in Japan to select a new Prime Minister adds intricacy to the Bank of Japan’s future moves. Leading candidates hold diverse views on monetary policies, posing potential risks to the stability of the yen. Meanwhile, the Bank of England opted to retain interest rates, with the governor emphasizing vigilance in avoiding rapid rate reductions.
The pound experienced a slight decline to $1.3310, following a surge post the release of strong British retail sales data on Friday. The recent rally in Bitcoin’s value, the Federal Reserve’s rate cut, and forthcoming political developments in Japan underscore the current dynamics of the market, highlighting the volatility and uncertainties surrounding major currencies in the short term.
