BTC/USD: Bitcoin Hits New Record Above $106,000 Ahead of Expected Fed Rate Cut

Markets are pricing in an interest rate cut of at least 25 basis points. But what if… the Fed decides to skip a cut?

• Bitcoin prices BTCUSD advanced to a fresh record high early Monday after a late-weekend pump stirred the market’s animal spirits. In another leg higher, after floating near the $100,000 mark for a few days, the OG token jumped to a new all-time high of $106,000 a pop, lifting its market cap to nearly $2.1 trillion. The bullish momentum comes as traders get ready for the Federal Reserve’s final meeting of 2024. What’s that about?
• The Fed (that’s the US central bank) meets up on Tuesday and Wednesday to decide whether to cut the level of interest rates. Previous guidance indicates that officials will cut borrowing costs by at least 25 basis points and markets are now pricing in that reduction as they scoop up risk assets that will get more affordable once rates go down. But there may be a twist to all that — what if rates actually stay the same?
• Cryptocurrency markets are optimistic by nature (as any other market). And this means that if the Fed decides to skip a cut, traders may get really frustrated and fear may spark a selloff. But that’s an extreme case — recent inflation data came in as expected, further boosting the chances of a rate cut this week. Besides Bitcoin, other tokens also pumped in anticipation of the rate slash — Ether rose 4% to draw closer to the key $4,000 level.