Ether Outpaces Bitcoin as Federal Reserve Interest Rate Cut Fuels Crypto Rally
Bitcoin and Ether experienced substantial gains on Monday following the U.S. Federal Reserve’s interest rate cut. Bitcoin is trading at $63,000, while Ether is around $2,600. The rate cut has led to widespread positive effects across the crypto market, including substantial rises in various altcoins and AI-driven tokens. Outlook on crypto ETFs suggests a potential recovery as investor sentiments improve.
On Monday morning, both Bitcoin and Ether—the two predominant cryptocurrencies by market capitalization—witnessed substantial gains, driven by the recent interest rate cut announced by the U.S. Federal Reserve. Bitcoin was trading at approximately $63,000, reflecting a 1.2% increase over the past 24 hours and an impressive nearly 8% rise over the week. In contrast, Ether was trading around $2,600, enjoying a 2.5% gain in the last 24 hours and an extraordinary 15% increase during the same weekly period, as reported by CoinMarketCap. This positive movement in cryptocurrency prices follows the Federal Open Market Committee’s decision to lower interest rates by 50 basis points on the previous Wednesday, establishing the federal funds target range between 4.75% and 5.00%. This strategic monetary policy shift precipitated a favorable response in risk assets, notably cryptocurrencies, which led the market’s rally. Other cryptocurrencies, including noteworthy altcoins such as Solana (SOL), Dogecoin, and Cardano, have similarly achieved gains of 8.5%, 4.9%, and 5.9%, respectively, over the past week. Interestingly, the most significant upsurge was detected in the AI-driven token sector, where tokens like Artificial Superintelligence Alliance (FET), Bittensor (TAO), and Sui (SUI) exhibited incredible growth rates of 25%, 81%, and 38% respectively over the week, as investors eagerly sought to leverage the momentum ignited by the rate cut. Regarding the future outlook, the situation of crypto exchange-traded funds (ETFs) appears poised for recovery after experiencing turbulence since September. According to ETF tracker Farside, spot Bitcoin ETFs had mixed inflows and outflows, whereas spot Ether ETFs predominantly recorded outflows during September. Nonetheless, the recent reduction in interest rates may positively influence investor sentiment toward these crypto ETFs, potentially resulting in increased allocation of funds to these investment vehicles in the near future.
The Federal Reserve plays a critical role in shaping economic conditions through its monetary policy decisions, particularly interest rate adjustments. Lowering interest rates typically has the effect of making borrowing cheaper, thus stimulating investment and spending among consumers and businesses. This policy shift can contribute to increased activity in riskier assets, such as cryptocurrencies, which often react positively to signals of accommodative monetary policy. Recent trends indicate a renewed interest in cryptocurrencies, catalyzed by changes in the macroeconomic environment, notably involving interest rates and investor psychology.
In summary, the recent interest rate cut by the Federal Reserve has positively impacted the cryptocurrency market, with both Bitcoin and Ether experiencing significant price increases. The overall market sentiment has seen notable enhancements, particularly among altcoins and AI-driven tokens. Furthermore, the potential turnaround for crypto ETFs indicates a promising outlook as investor confidence is likely to rebuild in the wake of favorable monetary policies. The developments in the cryptocurrency market highlight the interconnectedness between traditional financial policies and digital asset performance.
Original Source: qz.com
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