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Bitcoin, the premier cryptocurrency by market capitalization, notched an impressive new all-time high of $76,800, rallying in the wake of the U.S. presidential election results and the Federal Reserve’s announcement of a second consecutive rate cut, setting a favorable backdrop for cryptocurrency growth. The remarkable surge in Bitcoin’s value coincided with the re-election of Donald Trump, an event that has historically influenced market optimism related to regulatory environments and economic policies favorable to cryptocurrencies. The Federal Reserve’s decision to lower its benchmark overnight lending rate by 25 basis points to a range of 4.50%-4.75% added momentum to the bullish sentiment permeating the crypto space, marking a pivotal shift in the Fed’s strategy towards balancing inflation control with supporting the labor market, highlighting a change from its previously more optimistic economic stance.
The unanimous decision, inclusive of Governor Michelle Bowman’s participation, underscores a revised economic risk evaluation by the Federal Open Market Committee (FOMC), which now regards the employment and inflation goals outlook as balanced. This shift is notable against the backdrop of September’s half-percentage point rate reduction. The anticipation of these cuts has been a major driver for both the stock and cryptocurrency markets, with predictions suggesting continued rate reductions could further buoy market prices. In response to the election results and subsequent Fed action, crypto markets have entered a period of strong positive momentum, characterized by high trading activity and an optimistic outlook for digital assets like Bitcoin and Ethereum.
In an in-depth discussion with NewsBTC, Aurelie Barthere, Principal Research Analyst at Nansen, shed light on the significant rise of Bitcoin post-election. The increase, she explains, aligns with heightened trading volumes, indicating a robust market dynamic. This period of “de-risking” leading up to the election, driven by unfavorable polls for Trump, shifted dramatically to “re-risking” as the election outcome became clear. Barthere’s analysis suggests that the Republican victory in the House could further propel this rally, though she also warns of potential profit-taking as new policies are put to the test, particularly in light of speculation regarding political pressures on the U.S. SEC chair.
Ethereum, too, is benefiting from this dynamic, with rising anticipation for a resurgence in decentralized finance (DeFi). The election’s outcome has led to significant net inflows into Ethereum exchange-traded funds (ETFs), totaling $52 million, underscoring a widened retail interest in the second-largest cryptocurrency. These developments point to Ethereum’s increasing traction within the marketplace, signifying potential for broader adoption yet to be fully realized. As of this writing, Bitcoin and Ethereum have posted nearly 10% and 14% gains, respectively, over a seven-day period, underscoring the strong momentum within the cryptocurrency market following these key political and financial events.
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