What’s going on here?
The US Federal Reserve has announced a half-percentage point cut interest rate cut, sparking a surge in U.S.-listed crypto stocks and pushing bitcoin up 4%.
What does this mean?
Bitcoin, the most popular cryptocurrencyBitcoin was trading at $63,177 on Thursday, reflecting renewed investor interest following the Fed’s decision. A crypto research strategist at 21Shares noted that bitcoin and other digital assets traditionally perform well in low-interest rate environments. This drop in rates could signal a return of liquidity, triggering risk-on sentiment and fueling a sharp rally. The positive impact wasn’t limited to bitcoin: Shares of Riot Platforms rose 5%, Marathon Digital 5.8%, CleanSpark 6.1%, and Coinbase Global 4%. Even MicroStrategy, a major corporate backer of bitcoin, saw its shares rise 5%.
Why should I care?
For markets: Crypto stocks are getting a new dose of energy.
The Fed’s rate cut is breathing new life into crypto stocks, in line with the broader market’s positive reaction to increased liquidity. ETFs tracking bitcoin and ether, which received historic regulatory approvals earlier this year, have further bolstered investor confidence. With rates falling, crypto investments are seen as more attractive, which could lead to sustained interest and growth in the sector.
The overview: Politicians and cryptocurrencies: a game changer.
The political landscape adds another layer of complexity. Donald Trump’s pro-bitcoin stance and recent launch of a new cryptocurrency venture indicate a possible shift toward a more crypto-friendly country. He even paid for his burgers in New York City in a show of support. Despite the political uncertainty, senior leaders believe the United States will become more crypto-friendly regardless of who wins the presidential election.
