and other major cryptocurrencies rallied on Friday, reversing earlier losses after Federal Reserve Chairman Jerome Powell set the stage for the central bank to begin cutting interest rates in September.
Speaking at the high-profile annual meeting of global central bankers in Jackson Hole, Wyoming, Powell said he feels more confident about being able to control inflation after it hits its highest level in four decades in 2022.
While markets had already priced in Powell hinting at a rate cut for the Fed's September meeting, his comments may have been a bit more dovish than expected.
Right after his speech, Bitcoin surged by over 1.5%, reaching $61,900 after a brief spike above $62,000. Meanwhile, the price of rose by 2.9% to $2,685, and the price of , by 2.4% to $147. The price of Bitcoin rose by 2.7% on the day.
Traditional markets also posted solid gains: the Nasdaq rose 1.7%, the CPI rose 1.2% and gold rose 1%. In addition, the CPI fell five basis points to 3.80% and the CPI fell 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 liquidity from the market, which hurt 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-related stocks also performed well on the day. Coinbase (NASDAQ:) saw a 5% rise and MicroStrategy Incorporated (NASDAQ:) added 7% after falling around 8% earlier in the month. In the mining sector, Iris Energy and Clean spark (NASDAQ:) rose slightly 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 Federal Reserve at its next meeting, with the CME FedWatch tool giving it a 67.5% probability. As of Friday morning, the prediction algorithm also put the odds of a half-point cut at 32.5%.
