Bitcoin continued to rally on Sunday evening, driving above the $106,000 threshold as investors prepared for a highly expected interest rate cut from the Federal Reserve this week. The cryptocurrency peaked at $106,509, then stabilized just above $105,200. Its upward drive has been one of the more persistent rallies in cryptocurrency. The larger market, as measured by the CoinDesk 20, rallied 4%.
This rally comes ahead of the eagerly awaited two-day policy meeting by the Federal Reserve that is scheduled to close on Wednesday. It is widely expected that there would be a 25-basis-point rate cut, which the CME FedWatch tool is calling for at a near certainty of 96%. Lower interest rates tend to benefit Bitcoin, which, increasingly like a tech stock, has gained its appeal during low-interest environments and is capable of high returns. Historically, Bitcoin has performed well when the dollar weakens and the money supply expands. The former is a common accompaniment to rate cuts.
Bitcoin’s gains are not only about immediate market conditions. The digital asset has gained nearly 8% in December, 50% since the U.S. presidential election, and a remarkable 145% year-to-date. Growth also comes on the expectation of a benign regulatory climate that might be facilitated by the new administration led by former President Donald Trump, who is promising potential policies that may include creating a national strategic Bitcoin reserve, further increasing the outlook for the overall cryptocurrency market.
Besides the upside in Bitcoin price, news that MicroStrategy will be added to Nasdaq 100 stock index this month has also been watched. Shares in crypto-related companies like Coinbase and MicroStrategy made little movement in premarket trading, which reflects the main focus of the broader market on the Bitcoin and its price dynamics. As Bitcoin makes new records, investors look forward to the move by the Federal Reserve, which would further direct the way for Bitcoin. Having gained much ground with rising institutional interest and a pro-crypto macro environment, it continues to be one of the prominent players in the global financial markets.
