Bitcoin Hits New High Over $106,000 as Investors Watch Fed Decision

Bitcoin surged to a new record high on Sunday evening as investors anticipated an interest rate decision from the Federal Reserve later this week.

The price of Bitcoin, the leading cryptocurrency, was up by over 4%, reaching $105,207.00, with an earlier peak of $106,509. Meanwhile, Ether also experienced a rise of 4%, approaching the crucial $4,000 mark. The wider cryptocurrency market, as represented by the CoinDesk 20 index, recorded a gain of 4%.

Despite this bullish trend, shares of crypto-related companies, such as Coinbase and MicroStrategy, remained relatively unchanged in premarket trading. This stability followed news that MicroStrategy will be included in the Nasdaq 100 stock index and the popular QQQ ETF by the end of this month.

Bitcoin Reaches New Heights

The recent uptick in Bitcoin's price coincided with the tech-heavy Nasdaq Composite Index's performance, which closed the previous trading week with a modest gain of 0.3%, outpacing other major stock indexes.

Market participants are largely expecting the Fed to implement a 25-basis-point interest rate cut during its two-day policy meeting this week, concluding on Wednesday. Current projections from the CME Fedwatch tool indicate a 96% likelihood for this cut. Such a move is generally viewed as favorable for Bitcoin prices, aligning with its tendency to behave like a technology stock, which often flourishes in a low interest rate environment.

The Impact of Lower Rates

Lower interest rates typically signal a weakening dollar and an increase in the money supply, both of which have been shown to have long-term positive correlations with Bitcoin.

As it stands, Bitcoin is up almost 8% for the month and has soared by 50% since the U.S. presidential election, with a staggering 145% gain for the year. The expectation of a more supportive regulatory environment under a potential Donald Trump administration, including the establishment of a national strategic Bitcoin reserve, continues to serve as a strong positive influence for Bitcoin as well as other cryptocurrencies.

Bitcoin, Crypto, Fed