Bitcoin is on track for one of its strongest September performances, benefiting from a global trend of interest rate cuts, led by the US Federal Reserve. The largest cryptocurrency has gained over 10% this month, a stark contrast to the typical average decline of 5.9% seen in September over the past decade, according to data from Bloomberg. Meanwhile, an index tracking smaller cryptocurrencies has jumped more than 20%, reflecting more favorable financial conditions and increased interest in riskier areas of the crypto market.
The Federal Reserve, the European Central Bank, and the Peopleâs Bank of China all lowered borrowing costs in September to boost economic growth. Investors have reacted to these more accommodative monetary policies by pushing up assets like stocks and gold, anticipating additional stimulus measures.
"Bitcoinâs correlation with monetary policy remains most closely aligned with the Fed," said Sean McNulty, director of trading at liquidity provider Arbelos Markets. "Easing measures by other central banks also play a role."
The cryptocurrency climbed by as much as 1.2% on Friday, trading at $65,334 as of 1:12 pm in Singapore. It's up 56% in 2024, aided by inflows into US Bitcoin exchange-traded funds, though it remains below its record high of $73,798 reached in March.
The $65,000 level could remain "sticky" for a few hours due to the expiration of a significant number of options contracts on Friday, according to Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for digital-asset derivative trading. If Bitcoin fails to break decisively above $65,000, it could signal a potential weaker phase for the asset, as noted by crypto exchange Kraken.
Beyond monetary policy, the digital asset sector is also awaiting the outcome of the US presidential election. Many industry executives are hopeful that clearer American crypto regulations will improve market sentiment in the months following the election.
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