Bitcoin didn't waver after the United States Federal Reserve announced that it would leave interest rates unchanged—a widely expected move from investors.
The price of the biggest digital asset by market cap now stands at $66,585, according to CoinGecko, a 24-hour rise of 1.2%.
In the statement from the rate-setting committee, the policy-making body said that the U.S. economy was “expanding at a solid pace.”
But it added: “The committee judges that the risks to achieving its employment and inflation goals continue to move into better balance. The economic outlook is uncertain, and the committee is attentive to the risks to both sides of its dual mandate.”
Investors are now expecting the central bank to cut rates in September.
Bitcoin hit an all-time high of nearly $74,000 in March but has since then dipped and dived and largely remained below its 2021 record of $69,044.
A big part of the reason is investors looking to avoid “risk assets”—investments that experience volatile price action, like tech stocks and crypto—due to high interest rates.
The Fed started aggressively raising rates in 2022 in a bid to tame 40-year high inflation following the Covid-19 pandemic.
Both stocks and crypto were negatively hit by the tightening as investors tend to avoid such assets when borrowing is expensive.
But this year and last, both investments have experienced big gains. David Lawant, head of research at FalconX, told Decrypt that an incoming rate cut could lead to more capital into crypto space.
“As a risk-on asset class, crypto should benefit from increased liquidity and could react positively to further confirmation of an upcoming rate cut cycle,” he said.
Bitcoin investors have their eyes on what central banks around the world—not just in the U.S.—will do with monetary policy. Japan's central bank today raised interest rates for the second time since 2007.
OTC Trader at Wintermute Jake Ostrovskis told Decrypt that if the Fed does indeed move to cut interest rates in September, he expects “risk assets such as cryptocurrency to outperform into the year end.”
Edited by Ryan Ozawa.