Investing.com-- Bitcoin’s price rose to a three-week high on Friday and was headed for a strong week as risk appetite was boosted by an outsized interest rate cut by the Federal Reserve.
While the world’s biggest cryptocurrency had initially logged a mixed reaction to the rate cut, it eventually tracked an uptrend in other risk-driven markets, specifically stocks. Broader cryptocurrency prices rose on Friday and were also set for weekly gains.
Bitcoin rose 2.9% to $63,813.9 by 01:24 ET (05:24 GMT)- its highest level since mid-August.
Bitcoin heads for weekly gain
Bitcoin was trading up 6.4% this week, and was headed for a second positive week.
Sentiment towards crypto markets was boosted by the Fed’s 50 basis point rate cut, given that lower rates free up more liquidity that can then be deployed towards speculative assets.
The Fed’s cut marks the beginning of an easing cycle that analysts estimate could bring rates lower by as much as 125 bps by the end of the year.
But bigger gains in crypto- and broader risk-driven markets- were still limited by comments from Fed Chair Jerome Powell, who said that the Fed’s neutral rate will be higher than seen in the past.
His comments spurred doubts over just how low interest rates will fall.
The Fed’s outsized cuts also sparked some concerns over the state of the economy, and whether growth will slow in the coming months.
Low interest rates were a key driver of crypto’s 2021 bull run, although the sector has since seen an extended decline in retail interest. Spot Bitcoin exchange-traded funds provided a limited boost to trading volumes earlier this year.
Bitcoin has also remained largely within a tight trading range for most of this year.
Crypto price today: altcoins up, but set for mixed week
Broader cryptocurrency prices rose in tandem with Bitcoin, although altcoins were set for a mixed weekly performance. Recent capital flows into crypto have been largely directed towards Bitcoin and Ether, with the former largely retaining its dominance over the market.
World no.2 crypto Ether rose 5.5% to $2,544.20, and was sitting on a 5.2% gain this week.
SOL, XRP, ADA and MATIC rose between 0.2% and 7.2%, with Solana up the most this week with a 8.2% increase. The rest were set for a flat-to-low weekly performance.
Among meme tokens, DOGE rose 2.4% and was up 1.2% this week.