Bitcoin price experienced a significant rebound on Thursday, echoing a broader uptrend in risk-oriented markets following the Federal Reserve’s decision to maintain interest rates and signal forthcoming rate cuts in 2024.
Surging by 7.9% to reach $66,540.9 by 01:09 ET (05:09 GMT), Bitcoin swiftly recovered from its recent dip to $60,000 on Wednesday. The world’s largest cryptocurrency had faced considerable profit-taking after reaching record highs last week.
The dollar’s weakness further supported Bitcoin’s resurgence, as the greenback retreated sharply from two-week highs post-Fed announcement. This trend bolstered the overall cryptocurrency market, with Ethereum, the second-largest token, climbing 10% to $3,454.79 on Thursday.
Bitcoin Flourishes in Low-Rate Environment
The Fed’s adherence to its forecast of a 75 basis point rate reduction in 2024, coupled with Chair Jerome Powell’s acknowledgment of gradual progress toward the Fed’s 2% annual inflation target, signaled favorable conditions for Bitcoin. The cryptocurrency thrives in a low-interest-rate environment, attracting speculative investments in high-liquidity scenarios. Bitcoin’s notable surge in 2021 was largely attributed to ultra-low interest rates amidst the COVID-19 pandemic fallout.
Having already surged by over 50% in 2024, building on a stellar 100% rally in 2023, Bitcoin’s recent gains were fueled by increased capital inflows following the approval of spot exchange-traded funds (ETFs) for U.S. markets earlier in the year. The introduction of spot ETFs simplifies Bitcoin investment for traditional investors, potentially stimulating further capital influxes and priming the cryptocurrency for another rally later in the year.
Analysts Predict Bitcoin to Surpass $100,000
Analysts foresee Bitcoin surpassing the $100,000 mark by the end of 2024, buoyed by the ease of access provided by spot ETFs and the anticipated continuation of low-interest-rate policies.
However, Bitcoin and the broader crypto industry continue to face challenges stemming from a loss of investor confidence due to a series of high-profile frauds and scandals over the past couple of years. Additionally, perceived volatility remains a deterrent for risk-averse investors, despite Bitcoin’s ongoing price surges.