Bitcoin Tops $117,900 as Fed Rate Cut Boosts Cryptocurrency Prices
The recent 25 basis points Fed rate cut to 4% has led to a gradual recovery in major cryptocurrencies.
- Bitcoin reached $117,900, the highest since mid-August, showing a near 1% increase over 24 hours.
- Ethereum's ether rose by 2.7% but remains within a narrowing price range.
- Other major cryptocurrencies like Dogecoin, Solana, and BNB saw increases of over 4%, with XRP up nearly 3%.
- Solana briefly hit $245 amid CME's announcement to offer SOL options starting Oct. 13, aiming at increased institutional participation.
Matt Mena from 21Shares highlighted the Fed's openness to faster easing as an asymmetric setup for Bitcoin, potentially driving it to new highs by year-end. Bitcoin could surpass $124,000, with Ethereum possibly breaching $5,000.
Potential Headwinds
- The dollar index rebounded to 97.30 despite dovish Fed projections, reflecting Chairman Powell's cautious stance against rapid rate cuts and ongoing inflation concerns.
- A stronger dollar may lead to financial tightening, affecting BTC and other risk assets.
Tail Risk Pricing
- Market participants are accounting for tail risks, which are low-probability yet high-impact events.
- BloFin noted an increasing demand for tail protection due to heightened interest rate risk, seen in block trades data featuring short-dated put spread orders for BTC.
