Bitcoin experienced a nearly 5% boost as last week ended, reflecting a broader rally in the cryptocurrency market. The surge follows remarks from the Federal Reserve chair, Jerome Powell, on Friday, where hints of potential interest rate cuts sparked excitement among investors.
In his address, Powell highlighted that the job market has begun to show signs of easing, remarking that the conditions are currently less tight than they were prior to the pandemic. He added that the shift indicates it’s time for a policy adjustment.
Historically, lower interest rates have been favorable for Bitcoin and the broader crypto market. For instance, in 2017, the combination of low rates between 0.75% and 1.25% fueled a significant bull run and an initial coin offering (ICO) boom. However, when the Fed started raising rates the following year, the market’s growth momentum slowed down.
A similar pattern emerged during the 2020–2021 bull run. Following the Fed’s decision to cut rates to near-zero levels after the pandemic hit, Bitcoin embarked on a massive rally, skyrocketing by more than 1,000% in only a year. Yet again, this growth trend was interrupted in 2022 when rate hikes were reintroduced.
After Powell’s address, Bitcoin shot past $63,000, marking the first time it reached this level since Aug. 2, when the market began to dip. This upward movement wasn’t limited to Bitcoin alone. Several other leading cryptocurrencies joined in the rally, with Ether following closely, also rising more than 5%.
Significant gains were also seen in the Layer 1 altcoin market, where top performers included Solana, Near Protocol, Avalanche, SUI and Aptos. These coins recorded increases of 4%, 11%, 8%, 20% and 12%, respectively.
Artificial intelligence (AI)-related tokens were not left out, with prominent names such as Render, Bittensor and Artificial Super Intelligence surging by 23%, 12% and 19%, respectively. Even meme coins joined the rally, as Shiba Inu and Dogecoin both climbed by more than 7%.
Overall, the cryptocurrency market saw a 3% increase in total capitalization on Friday, largely driven by the wave of bullish sentiment. However, this upward momentum led to significant losses for short traders, who suffered liquidations totaling more than $91 million, due to the sudden market shift.
Looking ahead, the crypto market’s positive trajectory may continue if the Fed proceeds with the anticipated rate cuts. This anticipation is supported by the stablecoin market’s recent growth, which, according to CryptoQuant, reached an all-time high of $165 billion. A growing stablecoin market cap is often seen as a precursor to increased inflows into Bitcoin and other cryptocurrencies, signaling fresh capital entering the space and potentially fueling further price gains in the weeks to come.
Crypto industry players, such as Hive Blockchain Technologies Ltd. (NASDAQ: HIVE) (TSX.V: HIVE), will be hoping that the upward momentum of various cryptos continues, since this helps support the growth of the industry.
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