Bitcoin Rallies and Crypto Prices Roar Back as the Fed Comes to the Rescue

The price of Bitcoin has risen 7% over the past 24 hours to near $67,500, rebounding after the largest crypto traded as low as the $60,000 zone in its Wednesday trough. Bitcoin endured a selloff over the past week after hitting a record peak near $74,000, but prices began to recover after the Fed signaled three cuts to interest rates this year, which lifted the

Dow Jones Industrial Average,

S&P 500,

and

Nasdaq

to all-time highs. 

“Bitcoin rallied leading into the [Fed] meeting and after, paring the earlier losses of the last week,” said Steven Lubka, head of private clients at crypto firm Swan Bitcoin. “The recent drop was likely overdone.”

While the central bank held interest rates steady, Fed Chairman Jerome Powell in a press conference suggested that recent hot inflation readings do little to disrupt the case for interest rate cuts in the months ahead. The so-called dot plot—a summary of individual Fed officials’ economic projections—also signaled that multiple reductions to benchmark borrowing costs are coming this year.

The Fed is important to crypto markets because tokens, like stocks, are sensitive to rates and wider risk sentiment. When rates are higher and yield on government bonds are elevated, investors have fewer reasons to buy higher-risk bets like Bitcoin, but when rates fall, traders tend to seek out riskier plays like tokens.

Beyond Bitcoin,

Ether

—the second-largest crypto by market value—jumped 11% to near $3,600. Smaller tokens also were higher, with

Cardano

climbing 5% and

Polygon

popping 4%. Memecoins outperformed, with

Dogecoin

soaring 16% and

Shiba Inu

surging 9%.

Write to Jack Denton at jack.denton@barrons.com