© Reuters
Investing.com– The price of bitcoin rebounded strongly on Thursday following recent losses, following a broader rally in risk-driven markets after the Federal Reserve held interest rates steady and signaled that would produce rate cuts in 2024.
rose 7.9% to $66,540.9 at 01:09 ET (0509 GMT), after falling as low as $60,000 on Wednesday. The world's largest cryptocurrency was hit by heavy profit-taking at the Federal Reserve, after it hit record highs last week.
Weakness in Bitcoin's rally helped, as the dollar fell sharply from two-week highs after the Fed. This trend also supported the broader cryptocurrency market, with the world's No. 2 token rising 10% on Thursday to $3,454.79.
Bitcoin thrives in a low rate environment
The Federal Reserve held its interest rates on hold in 2024, while Chairman Jerome Powell also signaled further, albeit slow, progress toward the Fed's 2% annual inflation target.
Lower interest rates bode well for Bitcoin, which benefits from a high liquidity environment that encourages speculative investments. The token's bull run in 2021 was largely due to ultra-low interest rates in the wake of the COVID-19 pandemic.
Bitcoin is already up more than 50% so far in 2024, following a stellar rally of more than 100% through 2023. The token's latest gains were fueled by higher capital inflows following the approval of exchange-traded funds at expected for US markets in early 2024.
Spot ETFs make investing in Bitcoin much easier for traditional investors. This ease of access, coupled with potentially lower interest rates, could set Bitcoin up for a rally later in 2024.
Analysts expect the token to surpass the $100,000 level by the end of 2024.
But Bitcoin and the broader crypto industry are still having to deal with a marked loss of faith, following a series of high-profile frauds and scandals over the past two years.
The token's perceived volatility also makes it appear less attractive to risk-averse investors.
