Bitcoin jumps close to $61,000, then pulls back after Fed’s rate cut

Bitcoin (BTC) experienced a sudden increase, approaching $61,000 shortly after the Federal Reserve (Fed) lowered US interest rates by 0.5%, its first cut in over 4 years. However, it quickly pared its gains amid volatile trading.

Bitcoin is now trading at around $60,500, up 1.5% in the last hour, according to data from CoinGecko. The largest crypto asset saw a slight decline at Wall Street opening today, as the crypto market awaited the Fed’s interest rate decision and its implications for the economy.

Ethereum (ETH) also soared by 1% to around $2,300 following the rate cut announcement. Other major crypto assets, including Binance Coin (BNB), Solana (SOL), Ripple (XRP), and Toncoin (TON), followed suit, posting sudden gains.

Historical data shows that Bitcoin crashed 30% after the Fed announced a rate cut in March 2020. The price, however, started to rally toward the end of the year. By the end of 2020, BTC hit a record high of $61,300.

The rate cut decision came as a major boost to the crypto market, which had been struggling with volatility and bearish sentiment in recent months. Lower interest rates reduce the opportunity cost of holding riskier assets like crypto assets, making them more attractive to investors.

Plus, the Fed’s move suggests a potential easing of economic conditions, which could benefit the broader financial markets and indirectly support the crypto sector.

However, the aggressive rate cut could also be seen as a response to weakening economic conditions, which may lead to short-term pullbacks in crypto prices.

The crypto market cap currently sits at $2.15 trillion, down 3% over the past 24 hours.