Crypto Market Remains Steady Despite Fed’s 25 bps Cut
- The U.S. Federal Reserve lowered its benchmark interest rate.
- Bitcoin briefly surpassed $76,000.
- Despite the rate cut, the broader crypto market told a different story.
The Federal Reserve lowered its benchmark interest rate by 25 basis points on Thursday, a move that economists widely expected.
The decision sent Bitcoin surging to a new all-time high, but the broader crypto market responded with a collective shrug.
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Fed Cuts Interest Rate
The rate cut , which brings the federal funds target range to 4.5%-4.75%, is the latest in a series of dovish moves by central banks around the world.
In its statement, the Fed cited easing labor market conditions and progress toward its 2% inflation target, although prices remain somewhat elevated.
“Inflation has made progress toward the Committee’s 2% objective but remains somewhat elevated,” the Federal Reserve noted.
A Boost for Bitcoin, but Not for the Broader Market
Bitcoin, the largest cryptocurrency by market capitalization, briefly surpassed $76,000 after the Fed’s decision, reaching a new record high of $76,943.12.
The surge was fueled by optimism surrounding the election results and a record-breaking inflow of $1.38 billion into Bitcoin ETFs on Nov. 7.
However, the broader crypto market told a different story. The global market capitalization stood at $2.49 trillion, reflecting a slight dip of $1.31 billion.
DeFi (decentralized finance) volume accounted for just 5.3% of the 24-hour total, while stablecoins dominated trading activity, making up 96% of the overall volume.
A Disconnect Between Crypto and Traditional Markets
The muted reaction in the crypto market is notable, given the historical correlation between crypto prices and traditional market sentiment.
High interest rates tend to deter investors from riskier assets like cryptocurrencies, so crypto investors would typically welcome the rate-cut trend.
However, the crypto market has decoupled from traditional markets in recent months, with investors taking a more nuanced view of the economy and interest rates.
As a result, the Fed’s move had little impact on the broader crypto market, with most major cryptocurrencies trading flat or falling in the aftermath.
At the time of writing, Bitcoin was trading at $75,913.87, up 1.1% from the previous day but retracing from overnight levels.
