In a recent development that’s captured the attention of investors and financial analysts alike, the cryptocurrency market has experienced a significant upswing.
This surge is largely attributed to the dovish stance of U.S. Federal Reserve Chair Jerome Powell and the central bank’s decision to stick with its plan for three rate cuts this year, despite the rising inflation figures.
Leading the charge, Bitcoin (BTC) has made a remarkable recovery, surging to a daily high of $67,781. This marks a more than 10% increase from its value just hours earlier. Similarly, Ethereum (ETH) bounced back, erasing a 6% dip it suffered earlier in the day. The initial dip for ETH was triggered by reports of a confidential inquiry involving the Ethereum Foundation and discussions by the U.S. Securities and Exchange Commission to potentially classify it as a security.
Today’s Fed decision is BULLISH and #Bitcoin PUMPS to $67,000 🚀
But what are the implications of higher for longer interest rates?
PLUS the Eth Foundation removes code amid an SEC investigation?
AND why computer power = Superpower
Dante Cook with your daily update👇 pic.twitter.com/zxPDMVaOVa
— Swan (@Swan) March 20, 2024
Altcoins Join the Rally
The bullish trend wasn’t limited to Bitcoin and Ethereum. Altcoins like Dogecoin (DOGE), Litecoin (LTC), and Bitcoin Cash (BCH) also saw notable gains. This positive movement in the altcoin market appears to be influenced by news of Coinbase’s plan to offer futures contracts on these cryptocurrencies, a detail that had gone largely unnoticed despite being posted on a U.S. regulator’s website weeks ago.
The ripple effects of the crypto market surge and Fed’s dovish outlook were felt across traditional markets as well. The S&P 500 index jumped nearly 1%, reaching a new all-time high, while the Nasdaq-100 saw a 1.3% increase. The U.S. dollar index (DXY), conversely, fell by nearly 0.7% from its session high, suggesting a shift towards riskier assets among investors.
Fed’s Role in the Market Movement
Federal Reserve Chair Jerome Powell’s assertion of making “good progress on bringing inflation down” despite higher inflation readings provided a semblance of stability and predictability, influencing market dynamics significantly. Analyst Fejau from Reflexivity Research highlighted the Fed’s expectation of slightly higher inflation but pointed out that it’s not deemed significant enough to alter their dovish stance.
At the time of writing, Bitcoin is priced at $67,185.31, reflecting an 8.75% increase in the last 24 hours but an 8.10% decline over the past week. This contrasts with the overall cryptocurrency market’s 6.70% decline over the same period, underscoring Bitcoin’s significant role in the market trend.
Bitcoin price, Source: CoinGecko
This market behavior underscores the interconnectedness of cryptocurrency and traditional financial markets, and the significant impact of monetary policy decisions on digital assets. As investors continue to navigate these volatile markets, the role of central bank policies remains a key factor in shaping future trends.
Editorial credits: Shutterstock
