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The world's largest cryptocurrency rallied to around $63,200 — the highest level in two months — jumping 22% following a significant drop to $52,000 on Sept 6. The gains were spurred by expectations of a reduction in borrowing costs by the Federal Reserve, which led to greater demand for speculative assets.
Federal Reserve Chair Jerome Powell kicked off the new rate cycle era by initiating a 50 basis points cut in interest rates last week after holding it at a 23-year high for 14 consecutive months since July 2023. This marked the first rate cut since 2020 to address slowing economic growth and showed greater confidence in the fact that inflation is moving sustainably toward the 2% target level.
The central bank projects two more rate cuts of 50 bps in its final two meetings this year due in November and December. It indicates another 100-bps rate cut next year and a 50-bps cut in 2026, which means four rate cuts in 2025 and two in 2026. Lower interest would boost demand for higher-risk assets (read: Fed Initiates Rate Cuts: Top-Ranked Growth ETFs to Buy).
Additionally, the U.S. Securities and Exchange Commission approved listing and trading of options for asset manager BlackRock's spot bitcoin ETF on the Nasdaq.
The strong momentum led to record inflows in bitcoin ETFs in recent weeks. The Fidelity Wise Origin Bitcoin Trust (FBTC - Free Report) was at the forefront, attracting nearly $355.7 million of capital since Sept 9. This was followed by inflows of $185 million for ARK 21Shares Bitcoin ETF (ARKB - Free Report) , $134.3 million for Bitwise Bitcoin ETF (BITB - Free Report) and $15.8 million for BlackRock iShares Bitcoin Trust (IBIT - Free Report) . This underscores the renewed enthusiasm for Bitcoin and its related financial products.
Fidelity Wise Origin Bitcoin Trust also offers exposure to the price of bitcoin — without buying bitcoin directly — in brokerage, trust and tax-advantaged accounts. It debuted on Jan 11 and has accumulated $11.1 billion in its asset base. It charges 25 bps in annual fees and trades in an average daily volume of 6 million shares.
ARK 21Shares Bitcoin ETF has amassed $3 billion in AUM since its debut on Jan 11. It seeks to track the performance of Bitcoin, as measured by the performance of the CME CF Bitcoin Reference Rate – New York Variant. It has an expense ratio of 0.21% and trades in a volume of about 2 million shares per day on average.
With AUM of $2.4 billion, Bitwise Bitcoin ETF invests directly in Bitcoin and is easily accessible from a brokerage account. It has the lowest fees among the spot Bitcoin ETFs at 0.20% (read: Bitcoin Back on a Bullish Path? ETFs in Focus).
iShares Bitcoin Trust seeks to reflect the performance of the price of Bitcoin. It enables investors to access Bitcoin within a traditional brokerage account. The fund charges 25 bps in annual fees from investors. IBIT has AUM of $21.6 billion and trades in an average daily volume of $26 million shares.
Analysts’ View
Hedge fund manager Anthony Scaramucci believes that the rate cut, combined with increasing regulatory clarity in the U.S. crypto industry, could propel Bitcoin to new record highs.
As reported by CNBC, Jeff Kendrick from Standard Chartered Bank forecasts Bitcoin to reach an all-time high by the end of 2024 against the backdrop of the Fed lowering interest rates. If Trump wins, who publicly expressed support for the cryptocurrency sector this summer, Bitcoin price might rise to $125,000. But a Harris victory would likely trigger an initial price decline. However, the dip could be viewed as a buying opportunity given the progress on the regulatory front and a lower rate environment.
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Fed Rate Cuts Raise Appeal for Bitcoin ETFs
The world's largest cryptocurrency rallied to around $63,200 — the highest level in two months — jumping 22% following a significant drop to $52,000 on Sept 6. The gains were spurred by expectations of a reduction in borrowing costs by the Federal Reserve, which led to greater demand for speculative assets.
Federal Reserve Chair Jerome Powell kicked off the new rate cycle era by initiating a 50 basis points cut in interest rates last week after holding it at a 23-year high for 14 consecutive months since July 2023. This marked the first rate cut since 2020 to address slowing economic growth and showed greater confidence in the fact that inflation is moving sustainably toward the 2% target level.
The central bank projects two more rate cuts of 50 bps in its final two meetings this year due in November and December. It indicates another 100-bps rate cut next year and a 50-bps cut in 2026, which means four rate cuts in 2025 and two in 2026. Lower interest would boost demand for higher-risk assets (read: Fed Initiates Rate Cuts: Top-Ranked Growth ETFs to Buy).
Additionally, the U.S. Securities and Exchange Commission approved listing and trading of options for asset manager BlackRock's spot bitcoin ETF on the Nasdaq.
The strong momentum led to record inflows in bitcoin ETFs in recent weeks. The Fidelity Wise Origin Bitcoin Trust (FBTC - Free Report) was at the forefront, attracting nearly $355.7 million of capital since Sept 9. This was followed by inflows of $185 million for ARK 21Shares Bitcoin ETF (ARKB - Free Report) , $134.3 million for Bitwise Bitcoin ETF (BITB - Free Report) and $15.8 million for BlackRock iShares Bitcoin Trust (IBIT - Free Report) . This underscores the renewed enthusiasm for Bitcoin and its related financial products.
ETFs in Focus
Fidelity Wise Origin Bitcoin Trust (FBTC - Free Report)
Fidelity Wise Origin Bitcoin Trust also offers exposure to the price of bitcoin — without buying bitcoin directly — in brokerage, trust and tax-advantaged accounts. It debuted on Jan 11 and has accumulated $11.1 billion in its asset base. It charges 25 bps in annual fees and trades in an average daily volume of 6 million shares.
ARK 21Shares Bitcoin ETF (ARKB - Free Report)
ARK 21Shares Bitcoin ETF has amassed $3 billion in AUM since its debut on Jan 11. It seeks to track the performance of Bitcoin, as measured by the performance of the CME CF Bitcoin Reference Rate – New York Variant. It has an expense ratio of 0.21% and trades in a volume of about 2 million shares per day on average.
Bitwise Bitcoin ETF (BITB - Free Report)
With AUM of $2.4 billion, Bitwise Bitcoin ETF invests directly in Bitcoin and is easily accessible from a brokerage account. It has the lowest fees among the spot Bitcoin ETFs at 0.20% (read: Bitcoin Back on a Bullish Path? ETFs in Focus).
iShares Bitcoin Trust (IBIT - Free Report)
iShares Bitcoin Trust seeks to reflect the performance of the price of Bitcoin. It enables investors to access Bitcoin within a traditional brokerage account. The fund charges 25 bps in annual fees from investors. IBIT has AUM of $21.6 billion and trades in an average daily volume of $26 million shares.
Analysts’ View
Hedge fund manager Anthony Scaramucci believes that the rate cut, combined with increasing regulatory clarity in the U.S. crypto industry, could propel Bitcoin to new record highs.
As reported by CNBC, Jeff Kendrick from Standard Chartered Bank forecasts Bitcoin to reach an all-time high by the end of 2024 against the backdrop of the Fed lowering interest rates. If Trump wins, who publicly expressed support for the cryptocurrency sector this summer, Bitcoin price might rise to $125,000. But a Harris victory would likely trigger an initial price decline. However, the dip could be viewed as a buying opportunity given the progress on the regulatory front and a lower rate environment.