Bitcoin hits new all-time high ahead of expected rate cut

In a significant move, Bitcoin soared to a new all-time high on Sunday, with investors eyeing an anticipated interest rate cut by the Federal Reserve scheduled for later this week. The leading cryptocurrency's value surged by over 4% to reach $105,207.00, as reported by Coin Metrics, even touching a record peak of $106,509.

Alongside Bitcoin, Ether , the second-largest cryptocurrency by market capitalization, experienced a similar upswing, increasing by 4% and nearly breaching the $4,000 mark. The broader cryptocurrency market also reflected this positive trend, with the CoinDesk 20 index showing a collective gain of 4%.

Despite the buoyant cryptocurrency market, shares of prominent crypto companies Coinbase (NASDAQ:COIN ) and MicroStrategy saw little change in premarket trading. This muted response came even as MicroStrategy is set to be included in the Nasdaq 100 stock index and the heavily traded QQQ ETF later in December.

The rally in Bitcoin prices followed a positive performance by the Nasdaq Composite , which wrapped up the trading week on Friday with a 0.3% increase, outpacing other major U.S. stock indexes.

Market participants are now looking forward to the Federal Reserve's two-day policy meeting, concluding on Wednesday, with widespread expectations of an interest rate reduction. According to the CME Fedwatch tool, there's a 96% probability that the Fed will announce a 25-basis-point cut. Such a move is anticipated to favorably impact Bitcoin prices, as the cryptocurrency often exhibits similar trading patterns to technology stocks, which tend to benefit from lower borrowing costs.

The prospect of reduced interest rates also suggests a potential weakening of the U.S. dollar and an increase in the money supply, both factors historically correlated with Bitcoin's value. As investors await the Federal Reserve's decision, the anticipation is reflected in the cryptocurrency's recent price movements.

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Source: Investing.com