On Tuesday, bitcoin surged again above $38,000 on hopes that, should inflation continue to drop, the US central bank would be getting closer to cutting borrowing costs.
Before reducing the gain, the largest cryptocurrency by market value increased by as much as 3.3% to $38,264. On Friday, the price of bitcoin hit an 18-month high of $38,422. In general, investors are more willing to take on riskier assets like digital tokens when interest rates are lower.
Investors may turn back to riskier assets when rates rise in an effort to obtain higher returns, according to Michael Safai, a partner at the quantitative trading company Dexterity Capital. Together with the impetus that cryptocurrency has gathered in recent months thanks to ETFs and the removal of FTX from the picture, traders believe that the ingredients are in place for a new bull run.
A recent slowdown in economic activity has encouraged Federal Reserve Governor Christopher Waller, who believes this suggests the central bank’s policy is tight enough. During a scheduled speech on Tuesday at the American Enterprise Institute in Washington, he made the remarks.
Due to anticipation that the US Securities and Exchange Commission would soon authorise an exchange-traded fund (ETF) that will make direct investments in bitcoin, the price of bitcoin has increased by more than 40% since the beginning of October. This year, Bitcoin has increased by almost 130%, following a 64% decline in 2022.
Additionally, the confidence has contributed to the rise in “crypto stocks,” like ETF proxy MicroStategy Inc., exchange operator Coinbase Global Inc., and miner Marathon Digital Holdings Inc. This year, the stocks of all three have increased by about 250%.