On Thursday, U.S.-listed cryptocurrency stocks saw a notable rise, driven by a half-percentage point interest rate decrease that encouraged investors to take on more risk. This move added to the industry’s positive momentum, which has already experienced some significant victories this year.
The rate cut is likely to renew interest in Bitcoin (BTC), which often influences the entire market as investors seek higher returns and move away from safer assets. BTC saw a 4.6% increase, trading at $62,991, while Ether rose by 6%. Meanwhile, Solana, another popular cryptocurrency, surged by 10%.
September has seen a 6% increase in Bitcoin prices, defying past trends as one of the worst months ever.
MicroStrategy, one of the largest corporate supporters of Bitcoin, saw its stock increase by nearly 10% while Coinbase Global rose by 6.4%. Other crypto asset miners, such as CleanSpark, Riot Platforms Inc. (NASDAQ: RIOT), and Marathon Digital, also experienced gains, with their stocks rising 5.3%, 1.6%, and 4%, respectively.
Some investors worry that the larger-than-expected rate decrease, when a quarter-point reduction could have sufficed, indicates deeper concerns about the economy. On the other hand, many are optimistic that easier borrowing conditions will increase liquidity, potentially supporting higher asset prices.
According to 21shares’ cryptocurrency research strategist Matt Mena, over $6 trillion is sitting in money market funds, which will soon be earning 50 basis points less. The rate cut could result in more liquidity, which would ignite a risk-on attitude and propel the market higher.
According to Decimal Digital Currency co-founder Henry Robinson, while the cut is daring in and of itself, what counts is what it stands for. This may mean that hawkish monetary policy is coming to an end for the time being.
Earlier this year, exchange-traded funds (ETFs) tracking the price of Bitcoin and Ether received key regulatory approvals, further lifting investor confidence. However, recently, sentiment has fluctuated due to uncertainty surrounding the upcoming United States presidential election.
Donald Trump, the GOP presidential candidate, has positioned himself as an advocate of Bitcoin and has promised to remove Gary Gensler, the SEC Chair, who has drawn criticism for taking a firm line against the cryptocurrency sector.
Trump also recently launched a new crypto-related venture and reportedly used Bitcoin to pay for food during a campaign event in New York.
Despite the political uncertainty, industry insiders believe the U.S. will likely become more favorable toward cryptocurrencies, no matter who wins the presidential election.
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