Bitcoin clears $40k a dollar on dovish Fed bets, ETF hype
Investing.com-- Bitcoin rose past $40,000 a dollar for the first time in 2023 on Monday, aided by growing optimism over an early interest rate cut by the Federal Reserve, while focus also remained on the potential approval of a spot exchange-traded fund for the token.
The world’s biggest cryptocurrency rose 2.7% to $40,521.0, extending gains after a three-week rally. The token hit $40,825.0 earlier in the day- its highest level since May 2022, before the failure of the stablecoin Terra triggered an over year-long rout in cryptocurrency markets.
World no.2 crypto ethereum rose 1.9% to $2,210.49- its highest level since May 2022.
A key point of support for bitcoin and crypto prices was weakness in the dollar, as growing expectations for an early interest rate cut by the Fed sparked a rally in risk-driven assets.
Markets saw recent comments from Fed Chair Jerome Powell as decidedly less hawkish, as he flagged an increased need for balance between keeping monetary conditions tight and still fostering a soft landing for the U.S. economy.
This saw traders begin pricing in an over 90% chance that the Fed will keep rates on hold in December, and an over 60% chance it will cut rates by as soon as March 2024. The Fed is set to meet on Dec. 12 and 13.
But U.S. inflation still remains well above the Fed’s 2% annual target, while the labor market also appears strong. Nonfarm payrolls data due this Friday is expected to provide more cues on the latter.
The prospect of lower interest rates bodes well for bitcoin, given that easy monetary policy and increased speculative trading saw the token reach a record high of nearly $69,000 in 2021.
It had since fallen drastically as interest rates rose, while the crypto industry was also
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