Cryptocurrencies led by Bitcoin have experienced a surge today, breaking the stagnant trading range that was prevalent since mid-August. Bitcoin, the largest digital asset, saw its price increase by 1%, exceeding $26,750 and distancing itself from the $26,000 benchmark around which it has been trading for the past month. A move beyond $27,000 is seen as a significant milestone for traders, given the recent low volatility and trading volumes in the crypto market.
In anticipation of the Federal Reserve's decision this week, investors are preparing to analyze the Fed's language closely for any indications of a potential rate hike in November. This decision is expected to impact cryptocurrency prices, mirroring its effect on the Dow Jones Industrial Average and S&P 500 in the stock market. The central bank is predicted to maintain steady interest rates in its forthcoming announcement on Wednesday.
Over the past year, borrowing costs have reached their highest level in a generation as the Federal Reserve took measures to control inflation. This has exerted considerable pressure on cryptocurrencies and stocks alike because higher returns on risk-free cash often reduce demand for riskier investments like Bitcoin. If there are indications that the central bank could halt rate hikes and possibly lower them next year, this could potentially boost Bitcoin's recent gains if traders decide to invest more in riskier assets.
Ether, the second-largest cryptocurrency, also saw an increase albeit less than 1%, reaching $1,630. The performance of smaller tokens or altcoins was less dynamic with Cardano and Polygon trading slightly above flat. Memecoins presented a mixed picture with Dogecoin falling close to 1% and Shiba Inu losing less than 1%.
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