The price of Bitcoin rose Friday, hitting its highest mark since the start of September as traders grew more confident that the Federal Reserve’s upcoming meeting would yield a jumbo-sized rate cut.
With Bitcoin’s price nearing $60,000—reaching as high as $59,735 per CoinGecko, up 2.5% on the day—the increase represented a reversal of September losses seen as government data stoked worries of a weakening U.S. economy. For example, Bitcoin fell as low as $53,300 a week ago after a weaker-than-expected jobs report for August.
The Federal Reserve is widely expected to lower its benchmark rate last week, loosening monetary conditions for the first time since 2020. Traders had anticipated an initial cut of 25 basis points after Fed officials signaled a measured approach to lowering borrowing costs.
Traders now view the Fed’s decision next week as a relative toss-up. The possibility of a 50-basis-point rate cut strengthened to Friday 43%, rising from 28% a day ago, per CME Last week, Federal Reserve Board Governor Christopher Waller said the size and pace of rate cuts would depend on incoming economic data. And following an inflation readout Wednesday, traders rallied around an 85% chance that the Fed starts off with a smaller cut.
An uptick in core inflation, which strips out food and energy prices, reinforced bets on a smaller rate cut. That’s because there’s a chance that inflation could pick up again if the Fed cuts rates too early, supporting the labor market without bringing inflation fully under control.
Still, the Fed raised rates rapidly to cool a decades-high bout of inflation that peaked in 2022. Speaking to the Wall Street Journal, a former vice chair at the Fed, Donald Kohn, made the case that the U.S. central bank could lower rates quickly in the name of risk management.Group.
