Bitcoin is on course for one of its biggest September gains as a global wave of interest rate cuts, headlined by the US Federal Reserve, helps the largest digital asset to buck a seasonal jinx.
The token is up over 10 per cent this month, contrasting with an average 5.9 per cent decline in September during the past decade, data compiled by Bloomberg shows. An index of smaller coins has climbed more than 20 per cent, a sign of looser financial conditions enlivening riskier segments of the crypto market.
The Fed, the European Central Bank and the People’s Bank of China all lowered borrowing costs in September to support economic growth. Investors responded to more accommodative monetary conditions by bidding up everything from stocks to gold, anticipating further stimulus ahead.
“Bitcoin’s correlation with monetary policy continues to be highest with respect to the Fed,” said Sean McNulty, director of trading at liquidity provider Arbelos Markets. “Other central banks easing certainly helps too.”
The cryptocurrency rose as much as 1.2 per cent on Friday (Sep 27), changing hands at US$65,334 as at 1.12 pm in Singapore. It is up 56 per cent in 2024, helped by inflows into US Bitcoin exchange-traded funds, but off the record of US$73,798 hit in March.
The US$65,000 level may prove “sticky” for a few hours due to the expiry of a large number of options contracts on Friday, said Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for trading in digital-asset derivatives.
A failure to break above US$65,000 “decisively” could presage a weaker period for the token, according to a note from crypto exchange Kraken.
Aside from monetary policy, the digital-asset industry is awaiting the resolution of the US presidential election race. Many executives expect a lift to sentiment from clearer American crypto regulations in the months after the vote. BLOOMBERG
