Bitcoin (CRYPTO:BTC) surged to $64,000, its highest level in a month, following the U.S. Federal Reserve's decision to reduce interest rates by 50 basis points, exceeding expectations of a quarter-point cut.
This marks the first rate reduction by the Fed in four years and has contributed to positive market momentum for Bitcoin.
Crypto analysts, including Matthew Graham from Ryze Labs, view the Fed's move as a "significant bullish catalyst" for Bitcoin and other risk-on assets.
Graham pointed out that global macroeconomic factors have been a key driver of cryptocurrency prices over the past few years, adding to the bullish sentiment around the rate cut.
Data from CoinGlass showed that the recent surge in Bitcoin led to the liquidation of $154 million in short positions across all cryptocurrencies, with Bitcoin accounting for nearly $74 million of that total.
This liquidation highlights the immediate impact of the Fed’s decision on traders who were betting against Bitcoin’s price.
However, not all analysts share the same optimism.
QCP Capital warned that the current euphoria might be short-lived, suggesting the market could take a "breather" as Bitcoin’s options volatility decreases.
This decline in volatility could signal that traders do not anticipate significant price fluctuations in the near term.
The global economic landscape adds to the uncertainty, as central banks around the world take varied approaches to monetary policy.
While the U.S. Fed opted for a rate cut, the Bank of Japan maintained steady rates, and the Bank of England paused further cuts.
These different strategies create a complex environment for Bitcoin and other speculative assets, potentially leading to short-term price swings as investors gauge the broader impact of global policies on market liquidity and sentiment.
At the time of reporting, the Bitcoin price was $64,331.54.