- Bitcoin is up to $63.41K and Solana is up to $151
- Investors are optimistic and see further reasons for growth
- There are reasons for further rate cuts, which could also boost the price
- Bitcoin and Solana have a 90-day rolling correlation index of 0.74 and should drive altcoins
Bitcoin jumps 6.4% expecting a Fed rate cut until after the FOMC meeting on September 18.
Investor forecasts were optimistic about this and expected a 1%-1.25% rate cut, but the 0.5% we got also makes a difference.
So, Bitcoin price shows stable growth, while Solana showed even better results with a 10% increase.
Bitcoin Reaction to Fed Rate Cuts
It’s been a while since the Fed rate cuts of 0.5% and it’s already possible to assess the impact on the major cryptos, and Bitcoin and Solana in particular have shown interesting results.
At the time of writing, Bitcoin’s price has reached $63.41K and investors expect this to be a positive reason for further gains.
FXTM Senior Market Analyst Lukman Otunuga said:
“Fed cutting rates may be a welcome development for Bitcoin bulls.”
It also reflected positively on the major beneficiaries, with MicroStrategy among others getting a great result with its share price up 11%.
Coinbase, which was up 6%, and bitcoin miner Marathon, whose shares were up more than 4%.
Grayscale Head of Research Zach Pandl also commented, expressing that Bitcoin will have reasons to grow under a variety of conditions:
“Central banks’ willingness to take risks with inflation tends to drive investors to store-of-value assets like gold and Bitcoin. Over time bitcoin will benefit from lower rates and a weaker dollar.”
Solana’s Reaction to Fed Rate Cuts
Solana reacted even better and showed a 10% gain, breaking through the $140 level, and at the time of writing, we have SOL at $151.
The growth also has reasons to continue and some analysts are predicting $160, or a 16% gain if it breaks through $140, despite several retests of this level in the last few days.
Also adding to the optimism is a Fed Chair comment that perhaps hints that rates will be cut some more:
“I don’t see anything in the economy that suggests the likelihood of a downturn is elevated. You see growth at a solid rate, you see inflation coming down, you see a labor market that’s still at very solid levels.”
In addition, Bitcoin and Solana show a 90-day rolling correlation index of 0.74, while providing growth incentives for the entire altcoin sector.
Conclusion
So, we have a positive effect of Fed rate cuts on the entire crypto sector and investors’ expectations are generally optimistic.
This is especially supported by possible further rate cuts in November and December, which may continue to drive prices until then and raise them afterward.
Let’s take a look at further dynamics as well as correlation with the altcoin sector, stay tuned.
