- Bitcoin and crypto stocks rose during a broad market rally on Thursday, one day after the Federal Reserve delivered a half percentage point interest rate cut.
- The price of bitcoin was higher by 5% at $63,131.24, and ether rose 6%, while the Solana token jumped 10.5%.
- Stocks tied to the price of bitcoin, such as Coinbase and MicroStrategy, also climbed, with Coinbase advancing 6% and MicroStrategy gaining 10%.
The price of major cryptocurrencies like Bitcoin and Ether rose on Thursday as part of a broad market rally, one day after the Federal Reserve announced a half percentage point cut in interest rates.
Fed Interest Rate Cut
On Wednesday, the Fed lowered its benchmark interest rate by 0.5 percentage points, the first rate cut of this size since 2008. The move aims to protect the economy from the impact of the coronavirus outbreak and subsequent financial market turmoil.
Bitcoin Price Increase
The price of Bitcoin rose by 5% to $63,313 on Thursday, building on gains made before the Fed’s announcement, according to Coin Metrics data. The cryptocurrency initially jumped after the Fed news then pulled back as traders analyzed the decision.
Bitcoin often acts as both a hedge and a risk asset. Lately it has traded more in line with the Nasdaq Composite Index than with gold.
Ether and Other Cryptocurrencies
Besides Bitcoin, Ether rose by 6% on Thursday while the Solana token jumped 10.5%.
Crypto-Related Stocks
Stocks of companies tied to the crypto market also climbed. Bitcoin exchange operator Coinbase gained 6% and MicroStrategy, which is seen as a high beta play on Bitcoin, rose 10%.
Some investors believe the large 0.5 percentage point cut, instead of a smaller 0.25 point reduction, signals the Fed is very worried about economic growth. Others focus more on easier money supporting prices across markets.
Outlook and Analysis
Bitcoin often performs worst in September but is up 6% for the month so far. However, analysts warn it may not continue if other central banks tighten policy.
Bitcoin remains below its all-time high near $65,000. According to some, it needs to break above that level for further momentum.
