Bitcoin is poised for one of its most significant September gains, buoyed by a global wave of interest rate cuts led by the U.S. Federal Reserve. This trend has allowed the largest digital asset to break free from the seasonal downturn typically seen during this month.
As of now, Bitcoin has risen over 10% in September, contrasting sharply with the average decline of 5.9% observed in the same month over the past decade, according to data. Additionally, an index tracking smaller cryptocurrencies has surged more than 20%, indicating a relaxation in financial conditions that is energizing riskier segments of the crypto market.
The Fed, along with the European Central Bank and the People’s Bank of China, has lowered borrowing costs this month to stimulate economic growth. In response to these more accommodative monetary conditions, investors have increased their bids on a wide range of assets, including stocks and gold, anticipating further stimulus measures.
“Bitcoin’s correlation with monetary policy continues to be highest with respect to the Fed,” stated Sean McNulty, director of trading at liquidity provider Arbelos Markets. He noted that easing measures from other central banks also contribute positively to Bitcoin’s performance.
On Friday, Bitcoin climbed as much as 2.8%, trading at $65,745 as of 4:25 p.m. in New York. The cryptocurrency has gained 56% in 2024, driven by inflows into U.S. Bitcoin exchange-traded funds (ETFs), although it remains below its all-time high of $73,798 reached in March.
The $65,000 price point may prove to be a “sticky” level for a few hours, influenced by the expiration of a substantial number of options contracts on Friday, according to Caroline Mauron, co-founder of Orbit Markets, a liquidity provider for digital asset derivatives. A failure to decisively break above this threshold could indicate a potential downturn for Bitcoin, as suggested by a note from the crypto exchange Kraken.
In addition to monitoring monetary policy, the digital asset industry is also keenly awaiting the outcome of the U.S. presidential election. Many industry executives anticipate a positive shift in sentiment and clearer regulatory guidance for cryptocurrencies in the months following the vote.
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