Bitcoin soared to a record high above $106,000 on Sunday evening, continuing its remarkable rally as investors await an anticipated interest rate cut from the U.S. Federal Reserve later this week.
The world’s largest cryptocurrency rose more than 4% to $105,207.00, according to Coin Metrics, after briefly reaching a new all-time high of $106,509. Ether followed suit, climbing 4% and approaching the $4,000 threshold. The broader crypto market, as tracked by the CoinDesk 20 index, also gained 4%.
Crypto Equities and Market Response
Despite Bitcoin’s surge, shares of crypto-focused companies like Coinbase and MicroStrategy remained flat in premarket trading. MicroStrategy is set to join the Nasdaq 100 index and the widely traded QQQ ETF later this month, a move that reflects its growing prominence in equity markets.
Bitcoin’s rise coincided with gains in the tech-heavy Nasdaq Composite, which ended last week 0.3% higher, outperforming other major U.S. stock indexes.
Fed Rate Decision and Its Impact on Bitcoin
Investor focus is now firmly on the Federal Reserve’s two-day policy meeting, which concludes Wednesday. Markets are pricing in a 96% likelihood of a 25-basis-point rate cut, according to the CME FedWatch Tool.
Such a move would likely benefit Bitcoin, which often trades in tandem with tech stocks and thrives under lower interest rates. Lower borrowing costs generally weaken the U.S. dollar and expand the money supply, two factors that have historically supported Bitcoin’s price appreciation.
Bitcoin’s Stellar Year
Bitcoin’s performance has been nothing short of extraordinary in 2024:
- Monthly Gain: Up nearly 8% for December so far.
- Post-Election Rally: Up 50% since the U.S. presidential election.
- Year-to-Date Surge: Up 145% this year.
Much of the optimism stems from expectations of a friendlier regulatory environment under the new administration. Speculation about the potential creation of a national strategic Bitcoin reserve under President-elect Donald Trump has further fueled bullish sentiment.
As the Fed’s decision approaches, market participants will be closely watching for any signals on monetary policy that could impact Bitcoin’s trajectory. Meanwhile, the cryptocurrency continues to attract institutional and retail investors seeking returns in an environment of lower interest rates and a weaker dollar.
