Bitcoin, Ethereum and altcoin will gather as traders get bullish after the Federal Reserve shows rate cuts this year.
Major digital assets rebounded on Thursday after falling the day before following a year-long cut in the Federal Reserve. 25 basis points reduced on Wednesday.
Bitcoin (BTC) is trading at around $117,750, up about 2% over the past 24 hours. Ethereum (ETH) is trading nearly $4,630, up about 3% that day.
XRP has risen 3% to $3.12, while Solana (Sol) has risen 6% to $249 and nearly $995 at $249. Token momentum is driven by increased network activity, and it reports that Binance may be approaching a deal, avoiding the Department of Justice (DOJ) compliance monitor.
Overall, Crypto’s total market capitalization rose 2.3% to $4.21 trillion, with Bitcoin dominance reaching 56.1% and Ethereum at 13.2%, according to Coingecko.
Experts said the Fed’s interest rate cuts have rekindled interest across the crypto market, particularly in stubcoin and distributed finance (DEFI).
Sidney Powell, CEO and co-founder of Maple Finance, explained that liquidity tends to flow through crypto in stages.
“Bitcoin and ETH will start with their first leg and then see the spins into Altcoins like Sol and XRP, then they’ll be Defi and other little cap tokens,” Powell told Defiant. “For Defi, lower rates are a clear plus because they increase leverage, trading volume and protocol fees.”
Powell added that if the current cutting cycle continues, “it could rekindle venture flows and institutional allocations, which will give the entire ecosystem a strong foundation for the next stage of growth.”
Liquidation and ETF
Crypto’s nearly $409 million crypto position has been liquidated over the past 24 hours, according to Coinglas.
Ethereum led the way in liquidation of more than $121 million, followed by nearly $107 million in Bitcoins, while other Altcoins accounted for more than $28 million.
On September 17, Spot Bitcoin ETF discovered more than $51 million inundation, bringing its seven-day inundation to about $2.9 billion, according to SoSoValue. The Spot Ethereum ETF recorded a spill of nearly $2 million, marking its second consecutive day of withdrawal.
Impact on Fed policy
Market activity on Thursday followed the Fed’s interest rate decision on Wednesday, along with a strong signal that two additional cuts could be made later this year.
Powell noted that these interest rate cuts could have a major impact on crypto yields and investor behavior.
“Crypto yields usually shift counters to traditional rates, because as the Fed cuts, investors fall into more growth and risk for assets like crypto,” explained Maple Finance CEO. “This increases prices and increases funding costs, which broadens the yield of the cryptocurrency and makes it even more attractive.”
He added that the move is likely to raise greater interest in Stablecoin’s yields for better returns.
“This will cause the balance sheet growth for crypto lenders like Aave, Maple and Tether,” Powell said. “We’re already beginning to see traditional allocators doing due diligence on crypto-assisted loans, so rate reductions could accelerate adoption here.”