Bitcoin Hits $62K, US Stocks Dip After Fed Rate Cut Impact

As mentioned repeatedly over the past few days, all financial markets, particularly the cryptocurrency sector, were closely watching the FOMC meeting held on September 18, where the US central bank was anticipated to lower interest rates for the first time in nearly four years.

When this expectation was met, the markets reacted wildly, experiencing significant price fluctuations. Here’s the situation 12 hours later.

BTC Rises

Many speculated that the interest rate cuts had already been factored into riskier assets like bitcoin. On the other hand, individuals like Arthur Hayes cautioned that the Federal Reserve’s actions could adversely affect the market. While his perspective was more long-term, the short-term reaction has been favorable for BTC’s value.

The asset had already risen from $57,600 to $60,000 the previous day but experienced extreme volatility following the Fed’s official announcement of a 50 basis point cut. In the initial hours after the declaration, BTC experienced several ups and downs.

After 12 hours, as the situation has stabilized (for now), bitcoin’s price stands nearly 3% higher than yesterday and has increased by 7% over the week. The asset reached a three-week peak above $62,500 earlier today but has slightly retraced to $60,000 as of now. Most altcoins have mirrored this trend, and the total cryptocurrency market capitalization has surged by about $100 billion overnight.

Liquidations have surged to $200 million within a single day, predominantly from short positions. Unsurprisingly, BTC leads with $75 million in liquidated positions, followed by ETH with $35 million.

Stocks Decline, Gold Experiences Volatility

The precious metal also saw increased volatility after the rate cut, initially rising from $2,550/oz to a new all-time high of $2,600 before pulling back to $2,545 and finally settling at $2,567.

The US stock market showed similar behavior, experiencing preliminary gains followed by small declines. The S&P 500 commenced the trading day at 5,641, peaked at nearly 5,680, but closed at 5,618. The Nasdaq Composite exhibited a similar trajectory, rising from 17,663 to over 17,800, ultimately dropping to 17,573 by the day’s end. The Dow Jones Industrial Average experienced comparatively less volatility, but still finished with a minor loss.

While it’s still too early for definitive conclusions, the developments over the first 12 hours indicate that riskier assets like cryptocurrencies have, at least for now, gained from the Fed’s decision to lower rates. Whether this will prove to be a bullish trend or if Hayes’ predictions will come to pass remains to be seen.