Cryptocurrency Bitcoin experiences a fresh peak due to rate reduction expectations, subsequently returns to lower levels.
Bitcoin, the world's largest cryptocurrency, has been on a remarkable surge in 2025, with its price reaching a new record high of $124,496 on Thursday. This surge has been driven by a combination of favorable macroeconomic conditions, growing institutional interest, clear regulatory frameworks, and a push from the US government, according to Eric Demuth, chief executive of Bitpanda.
Demuth further stated that there is rising demand in the retail sector, but especially from institutional investors in the US. Bitcoin has largely boomed since Trump's election, with significant investments from companies like Gamestop, Tesla, and Metaplanet.
The increase in Bitcoin's price is due in part to speculation about the US Federal Reserve cutting interest rates in September. US Treasury Secretary Scott Bessent suggested a 50 basis-point rate cut. Historically, Federal Reserve interest rate changes can influence cryptocurrencies indirectly by affecting liquidity, investor risk appetite, and dollar valuation.
Lower interest rates tend to increase liquidity in financial markets and reduce the attractiveness of traditional fixed-income investments, potentially driving investors toward higher-risk assets such as cryptocurrencies. A larger-than-expected cut could amplify these effects by signaling more aggressive monetary easing, possibly boosting demand for Bitcoin and altcoins as alternative stores of value or speculative assets.
However, it's important to note that cryptocurrencies also respond strongly to other factors such as regulatory developments, technological advances, and broader macroeconomic events. The impact of an interest rate move alone is complex and not guaranteed.
If the Fed implements a 50 basis-point cut in September, it could plausibly stimulate upward pressure on Bitcoin and other cryptocurrencies by increasing market liquidity and encouraging risk-taking. However, this remains speculative pending further economic context and market sentiment details.
For those interested in investing in Bitcoin and other cryptocurrencies, there are various DIY investing platforms available such as AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212. As always, it's crucial to do thorough research and consider your risk tolerance before making any investment decisions.
[1] Note: This article is based on the available information and does not constitute financial advice. For a more detailed analysis, it's recommended to follow updates from reliable financial news sources and consult with a financial advisor.
Investors may find a growing interest in Bitcoin and other cryptocurrencies as a result of lower interest rates, encouraging risk-taking and potentially boosting demand for these digital assets. For those wishing to invest, there are several DIY investing platforms such as AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212 available, but thorough research and consideration of one's risk tolerance is essential before making investment decisions.
