The US Federal Reserve cut its benchmark interest rate by 50 basis points to 4.75%-5%, the first time in four years after its most aggressive rate-hike cycle.

Fed members expect the median rate to fall to 4.4% by year-end, suggesting two more 50-bp cuts at upcoming FOMC meetings.

Bitcoin rose 1.2% to $61,000 before falling. US stocks also rose, with the Nasdaq up 0.8% and the S&P 500 up 0.6%. Gold held steady below $2,600.

Markets had been expecting monetary easing after Chairman Jerome Powell said policy needed to be adjusted.

The Fed's decision sparked volatility in markets. Wintermute had forecast a 2%-3% swing in Bitcoin in either direction.

Arthur Hayes, co-founder of BitMEX, has warned of a potential market crash due to the narrowing rate differential between the US dollar and the Japanese yen.