- Bitcoin surged above 5% in the past 24 hours after Fed Chair signaled that a rate cut is imminent.
- Cryptocurrency prices often perform better during lower interest rates environment.
- The general crypto market rallied, with several cryptocurrencies in key categories posting sizable gains.
- The rising stablecoin market cap indicates stronger buying pressure.
Bitcoin (BTC) has gained nearly 5% alongside a rally across the crypto market in the past 24 hours following indications of interest rate cut from Federal Reserve (Fed) Chair Jerome Powell's keynote on Friday morning.
Bitcoin's love for low interest rate
In his speech, Powell noted that the labor market has cooled and "conditions are now less tight than those that prevailed before the pandemic." Hence, "the time has come for policy to adjust," he said.
Bitcoin and the crypto market have historically posted higher prices when interest rates are low. This is evidenced by the crypto market bull run and ICO boom in 2017 when rates hovered around 0.75% - 1% and 1% - 1.25%. However, the market began seeing a correction when the Fed began hiking rates in 2018.
BTCUSD/USINTR
The crypto bull cycle from 2020 to 2021 also paints a similar picture. After the Fed slashed rates to 0% - 0.25% following the pandemic, Bitcoin began staging a bull run, rising more than 1,000% within a year. However, the market started retracing in 2022 when the central bank began hiking rates again.
Bitcoin and crypto market rallies after Fed Chair confirmed interest rate cut
Shortly after Powell's speech on Friday, Bitcoin surged above $63,000 for the first time since August 2, when the market began a downturn.
The general crypto market soared alongside Bitcoin, with several tokens in the top 50 posting sizable gains. Ethereum (ETH) appears to be mirroring Bitcoin's price, also rising above 5% on the day.
In the Layer 1 altcoin space, Solana (SOL), Avalanche (AVAX), Near Protocol (NEAR), Aptos (APT) and SUI are showing strength with gains above 4%, 8%, 11%, 12% and 20%, respectively.
The Artificial Intelligence tokens category is led by Artificial Super Intelligence (ASI), Bittensor (TAO) and Render (RNDR), which jumped by 19%, 12%, and 23%, respectively. Meme coins also saw noticeable gains, led by Dogecoin (DOGE) and Shiba Inu (SHIB), each rising more than 7% in the past 24 hours.
The gains across these sectors saw the general crypto market capitalization rising by over 3% on Friday.
Crypto market capitalization
Meanwhile, with buyers dominating the market, short traders have suffered huge losses, sustaining over $91 million in liquidations on Friday.
The price rally across the crypto market may continue in the coming weeks when the Fed eventually cut rates. The thesis is supported by the rising stablecoin market capitalization. The stablecoin market capitalization reached a new record high of $165 billion during the week, as per CryptoQuant's data.
Stablecoin total market capitalization
Increasing stablecoin market cap often correlates with higher prices in Bitcoin and the wider crypto market as it signifies an inflow of new capital.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks

XRP eyes recovery but derivatives market stalls progress
Ripple's XRP is up 2% in the early Asian session on Thursday following rising accumulation among investors and a potential bottom signal in the MVRV Ratio.

Ethereum could see a boost as Cboe files for 21Shares to begin staking within its ETH ETF
Ethereum (ETH) could be set for increased demand in the coming months following Cboe BZX 19b-4 filing with the Securities & Exchange Commission (SEC) to enable staking for the 21Shares Core Ethereum exchange-traded fund (ETF).

Bitcoin and crypto recovers from CPI data as Trump pushes Russia–Ukraine diplomacy
Bitcoin (BTC) and the crypto market saw slight gains on Wednesday after President Donald Trump's resolution calls with Russian President Vladimir Putin and Ukraine's President Volodymyr Zelenskyy.

Ethereum Price Forecast: ETH eyes $3,000 as Trump and Putin agrees to begin negotiations on ending Ukraine war
Ethereum (ETH) saw a 3% gain on Wednesday following United States (US) President Donald Trump's agreement with Russian President Vladimir Putin to begin negotiations to end the Russian-Ukraine war.

Bitcoin: BTC shows weakness, bears aiming for $90,000 mark
Bitcoin price hovers around $97,000 on Friday after losing nearly 5% in the last three days. CryptoQuant weekly report shows that activity on the Bitcoin network has declined to its lowest level in a year.

The Best Brokers of the Year
SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.