Bitcoin (BTC), the world’s foremost cryptocurrency by market capitalization, has reached an unprecedented all-time high, soaring to $76,800. This milestone comes in the wake of the recent US presidential election, where Donald Trump secured another term in the White House, paired with a more favorable monetary policy stance from the US Federal Reserve.
Federal Reserve’s Strategic Rate Cut: A Boost for Cryptocurrency
On Thursday, the Federal Reserve made headlines by announcing a reduction in its benchmark overnight lending rate by 25 basis points, setting a new target range of 4.50% to 4.75%. This move has injected a bullish sentiment into the cryptocurrency market, encouraging further investment and growth. This decision marks the second consecutive rate cut, following a half-percentage point decrease in September. The unanimous vote, which included Governor Michelle Bowman’s participation, indicates a strategic shift in the Fed’s approach to managing inflation while supporting the labor market.
Economic Outlook: A Balanced Perspective
In its post-meeting statement, the Federal Open Market Committee (FOMC) offered a revised assessment of economic risks. The committee now views the outlook for achieving employment and inflation goals as balanced, marking a shift from the previous month’s more optimistic stance. This reassessment suggests that the Fed is cautiously optimistic about future economic conditions.
Insight from Analysts
Doctor Profit, a recognized crypto analyst, commented on the recent surge in both stock and cryptocurrency markets, attributing the price increases to anticipation of the Fed’s rate cut. He forecasts that ongoing rate reductions in the coming quarters could further elevate prices across stocks and cryptocurrencies, offering a promising outlook for investors.
Post-Election Trends: Bitcoin and Ethereum on the Rise
In an exclusive interview with NewsBTC, Nansen’s Principal Research Analyst, Aurelie Barthere, discussed the significance of Bitcoin’s rise beyond its previous all-time high. Coupled with high trading volumes, this development signals robust positive momentum in the market. Barthere highlighted a period of “de-risking” leading up to the election, likely influenced by unfavorable polls for Trump. However, she observed a swift transition to “re-risk” following the election outcome, as confidence returned, further evidenced by the rising prices.
Political Influences on Market Dynamics
Barthere further noted that the Republican victory in the House of Representatives could serve to amplify this rally. However, she cautions that profit-taking might occur in the coming weeks as new policies are implemented, particularly regarding potential political pressure on the US SEC chair to step down. These political developments could influence the market’s trajectory and investor behavior.
Ethereum’s Ascension: DeFi and ETF Inflows
Ethereum is also gaining significant traction as expectations rise for a resurgence in decentralized finance (DeFi). Barthere noted an interesting uptick in the ETH/BTC price ratio, accompanied by substantial net inflows into Ethereum exchange-traded funds (ETFs), totaling $52 million on the day of the election results. These sustained inflows into the newly approved ETF market suggest a growing retail interest in Ethereum, the second-largest cryptocurrency. Barthere believes that Ethereum still has untapped potential for broader adoption.
Market Performance: Bitcoin and Ethereum’s Recent Gains
At the time of writing, Bitcoin was trading at $76,629, reflecting a nearly 10% increase over the past seven days. Similarly, Ethereum has experienced impressive gains, rising 14% during the same period to reach a current price of $2,885. These figures underscore the positive market sentiment and potential for continued growth in the cryptocurrency sector.
