(Bloomberg) -- Bitcoin was little changed after the Federal Reserve reduced borrowing rates for the first time since the Covid pandemic paralyzed the economy more than four years ago and helped cryptocurrencies break into the mainstream.
The US central bank lowered its benchmark interest rate by a half percentage point. Projections released following their two-day meeting showed a narrow majority, 10 of 19 officials, favored lowering rates by at least an additional half-point over their two remaining 2024 meetings.
The original digital asset initially gained about 2% before erasing the increase and trading at around $60,000, while smaller tokens mostly declined. Lower rates usually help to spur an increase in demand for riskier assets.
“It could signal in theory that the Fed is cutting 50 because they are worried about something,” Spencer Hallarn, global head of over-the-counter trading at crypto investment firm GSR. “If they think we are on the brink of recession then maybe feel more urgent to cut quickly.”
Bitcoin has been trading within a relatively narrow range since setting a record high of almost $74,000 in March.
“Knee jerk reaction higher as market gets some relief after weeks of flip flopping between 25 and 50 bps,” said Karim Dandashy, over-the-counter trader at Flowdesk US.
Hedge fund manager Anthony Scaramucci said in an interview earlier Wednesday that he expected Bitcoin to reach new record highs fueled by a combination of the interest-rate cut and more regulatory clarity on the crypto industry from the US.
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