According to CME Group’s FedWatch tool, 100% of traders have priced in at least a 25 basis point rate cut in the U.S. central bank’s next policy meeting.
Bitcoin surged to hit fresh all-time highs on Wednesday, propelled by strong demand from institutional investors amid higher bets of a rate cut by the U.S. Federal Reserve.
The largest cryptocurrency briefly surged past $124,000 before paring its gains, hitting its highest level since the mid-July peak. Ether, the second-largest digital currency, hit $4,780, also nearing its record-highs.
Bitcoin’s market capitalization is now over $2.5 trillion, compared with $1.37 trillion at the beginning of November, according to CoinMarketCap data. It has a higher valuation than tech giant Alphabet and trails Nvidia, Apple, and Microsoft.
The recent surge in digital assets is tracking gains of the equity markets, aided by the rate hike bets from the U.S. Federal Reserve. According to CME Group’s FedWatch tool, 100% of traders have priced in at least a 25 basis point rate cut in the U.S. central bank’s next policy meeting, while some are even expecting a 50 basis point cut.
U.S. Treasury Secretary Scott Bessent also floated a 50-basis-point rate cut, citing weakness in the labor market. He added that the Fed could have cut rates in June if it had been given accurate data, which he described as a “foundational issue” at the central bank.
Retail sentiment on Stocktwits about Bitcoin was in the ‘bullish’ territory at the time of writing, while traders were ‘extremely bullish’ about Ethereum.
According to CoinMarketCap data, net flow into Bitcoin ETFs totaled $91.6 million, with Ethereum ETFs seeing net flow of $35 million. On Tuesday alone, BlackRock’s iShares Bitcoin Trust ETF logged inflows of $111.4 million.
“U.S. CPI came in at 2.7%, under expectations, sending September Fed cut odds to 94%. Rate cuts mean cheaper money, and cheaper money usually finds its way into risk assets. The market likes it,” said BTC Markets analyst Rachel Lucas.
Bitcoin-linked stocks were in the green during extended trading. Shares of Strategy (MSTR), the largest corporate holder of Bitcoin, edged 0.9% higher, while Bitcoin miner Riot Platforms (RIOT) stock also gained 0.9%, and shares of its peer, MARA Holdings (MARA), rose 1%.
Crypto investors were also optimistic about U.S. President Donald Trump’s executive order last week, which directed the Labor Department to explore the possibility of allowing cryptocurrency in 401(k) retirement plans.
Cryptocurrency prices have skyrocketed since Trump was sworn in for a second term. He has dubbed himself the crypto-friendly president, and his Republican allies in Congress have swiftly moved to clear regulatory hurdles for digital assets.
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