Today’s Fed US Interest Rate Cuts Propel Bitcoin to $61K; $BTC ETFs Attract an Extra $250M

The Federal Reserve System (Fed) is poised to cut US interest rates by either 25 or 50 basis points (bps) during today’s Federal Open Market Committee (FOMC) meeting.

Coinciding with the event, Bitcoin’s ($BTC) price has soared by 5% to $61K, uplifting other major cryptocurrencies.

$BTC ETFs also attracted $250M in investments on Monday, two days before the Fed’s final decision.

However, investors must remain cautious: Binance’s BTC-USDT order book shows high sell-offs.

Ahead of today’s FOMC meeting (20:00 CET), where the Fed is poised to cut US interest rates by either 25 or 50 bps, Bitcoin’s price has spiked by ~5% to $61K.

$ETH, $SOL, $XRP, $ADA, and $AVEX also rallied by 2% to 4% over the past 24-hours. When $BTC climbs, other cryptos follow.

Alongside the Fed’s all-important decision, $BTC ETFs are also noticing the benefits.

It’s evident macroeconomic news impacts the crypto industry. Let’s peel back the layers to find out more.

$BTC’s Fear & Greed Index Sways Like the Fed’s Anticipated Decision

Over the last month, it was anticipated that the Fed would cut interest rates by 25 bps today. However, there’s currently a 65% likelihood the Fed will opt for a more impactful 50 bps.

If the Fed cuts interest rates by 25 bps instead of 50 bps, US citizens won’t be able to borrow as much money. Therefore, the economy will grow at a slower pace.

Bitcoin’s Fear & Greed Index mirrors the uncertainty surrounding the Fed’s decision, swinging back and forth between ‘Neutral’ and ‘Fear’ this past week. But, considering it hit the ‘Extreme Fear’ zone just ten days ago, it’s still a victory.

Notably, the Crypto Fear and Greed Index often reflects significant world events. In March 2020, its value plummeted to its lowest point following panic over Covid. Both DeFi and TradFi markets experienced notable sell-offs.

In contrast, the US finally cutting its interest rates for the first time in four years might give the crypto industry a much-needed boost.

Lowering the cost of borrowing capital will make it easier and cheaper for American citizens and businesses to access funds. With more cash in hand, it’s highly possible they’ll start investing in riskier assets, like crypto.

Further rate cuts will likely provide a tailwind for the crypto market. As liquidity expands and the cost of capital decreases, risk assets like crypto should stand to benefit. Shubh Varma, CEO, Hyblock Capital

Investors Pour $250M into $BTC ETFs Ahead of US Interest Rate Cut

Further indicating a solid appetite for crypto ahead of the Fed’s highly anticipated ruling is Bitcoin $ETFs attracting $250M in investments on Monday alone.

Prominent asset managers (including Fidelity, BlackRock, and Grayscale) launched SEC-approved $BTC ETFs in January, enabling entities and individuals to buy shares that reflect Bitcoin’s current value.

At first, they were in high demand and attracted billions in investor funds. However, interest soon waned – uncertainties regarding the Fed’s interest rate cuts are thought to have played a significant part.

On September 3, $BTC ETFs experienced their third-biggest loss post-launch, shredding over $287.7M. Fidelity’s $FBTC witnessed the most considerable loss ($162.3M).

However, since the news broke out about the Fed potentially raising US interest rates to 50 bps, $BTC ETF interest has rebounded.

But Like All Good Things, There’s a Catch

Alongside the Fed possibly slashing US interest rates by 50 bps, $BTC and other major cryptocurrencies have made a slight comeback.

However, amidst the excitement in both the TradFi and DeFi realms, Binance’s BTC-USDT order book (the most liquid trading pair by volume) shows sell-offs between $61K and $62.5K.

Such high-value sales might make it harder for $BTC’s price to rise in the short term, thus lowering its value.

Despite not wanting to burst the bubble, investors must remain cautious. Cryptocurrency resistance levels are often highly tested during macroeconomic events.

References

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Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.

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