and other major cryptocurrencies rebounded on Friday, reversing earlier losses after Federal Reserve Chairman Jerome Powell said the central bank would begin cutting interest rates in September.
Speaking at the prestigious annual meeting of global central bankers in Jackson Hole, Wyoming, Powell said he felt more confident about bringing inflation under control after it hit a four-decade high in 2022.
Although markets fully priced Powell’s remarks as hinting at a rate cut ahead of the Federal Reserve’s September meeting, his comments may have been a bit more dovish than expected.
Bitcoin rose more than 1.5% after his speech, reaching $61,900 after briefly rising above $62,000. Meanwhile, the price rose 2.9% to $2,685, and the price rose 2.4% to $147. The price was up 2.7% on the day.
Traditional markets also posted solid gains, with the Nasdaq up 1.7%, gold up 1.2%, and gold gaining 1%. Additionally, gold fell five basis points to 3.80%, and gold declined 0.6%.
Like tech stocks, Bitcoin often benefits from lower interest rates and increased market liquidity.
There is an inverse relationship between interest rates and cryptocurrency prices. When the Fed raised rates in 2022, it drained market liquidity, affecting both bitcoin and tech stocks. On the other hand, when the Fed cuts rates, it injects liquidity back into the market, which tends to favor riskier assets like bitcoin.
Cryptocurrency stocks also performed well throughout the day. Coinbase (NASDAQ:) rose 5% and MicroStrategy Incorporated (NASDAQ:) gained 7% after falling about 8% earlier in the month. In the mining sector, Iris Energy and CleanSpark (NASDAQ:) rose modestly by 2% and 4%, respectively. Marathon Digital (NASDAQ:) rose 6.5%, and Riot Platforms (NASDAQ:) gained 3%.
Markets are currently pricing in a quarter-point rate cut by the Fed at its next meeting, with the CME FedWatch tool giving it a 67.5% chance. On Friday morning, the forecasting algorithm also put the odds of a half-point cut at 32.5%.
