Bitcoin’s price surged past the $100,000 mark on Thursday, fueled by anticipation of impending Federal Reserve interest rate cuts and sustained optimism surrounding the leading cryptocurrency. This milestone, previously reached in December, underscores bitcoin’s remarkable ascent.
Over the past year, bitcoin has witnessed a nearly 150% price surge, driven by several key factors. The introduction of the first US bitcoin exchange-traded funds (ETFs), anticipated crypto policy changes under the new administration, and growing institutional adoption have all contributed to this impressive growth. Furthermore, market expectations of continued Federal Reserve interest rate cuts are significantly influencing bitcoin’s short-term price trajectory.
The Federal Reserve is widely projected to reduce interest rates next week, potentially bolstering bitcoin’s price above the $100,000 threshold. Lower interest rates often encourage investors to shift capital towards higher-risk assets, such as cryptocurrencies like bitcoin.
Wednesday’s US inflation data further solidified the likelihood of Federal Reserve rate cuts by revealing persistent inflationary pressures. This reinforces the narrative that the Fed will take action to mitigate inflation’s impact on the economy. As a result, investors are increasingly turning to bitcoin as a hedge against inflation and economic uncertainty. This increased demand contributes to upward price pressure.
At the time of writing, bitcoin is trading at $101,456.80.
“Current levels are above the psychologically important round level and the consolidation area of the last three weeks,” noted Alex Kuptsikevich, FxPro chief market analyst. “A confirmation of buying strength could see a quick rally into the $120,000 area.” This suggests that if the current buying momentum continues, bitcoin could experience a significant price surge in the near future.
Ethereum, the second-largest cryptocurrency, is currently trading at $3,971.93, reflecting a 7% increase. “However, this is a rally and not a breakout to new highs,” Kuptsikevich cautioned. “It will be interesting to watch the price action as it enters the $4100 area. From this level, there are roughly equal chances of a sharp reversal to the downside and a break of resistance with a flight to the $5,000 area.” This indicates that ethereum’s price movement remains volatile and its future trajectory is uncertain. While the recent gains are promising, the cryptocurrency faces potential resistance at the $4,100 level, which could lead to either a significant price correction or a further breakout towards $5,000. Investors should closely monitor ethereum’s price action in the coming days to gauge its potential direction.
