Bitcoin, Ethereum and Dogecoin rose after the Fed cut rates

The stock market is on fire on Thursday and that has extended to cryptocurrencies as well. In the last 24 hours, the value of Bitcoin (BTC 5.19%) rose 6.5% at 1:00 PM ET to $63,700, Ethereum (ETH 6.14%) is up 7.6% to $2,470 and Dogecoin (DOGE 4.79%) rose 6.3% to $0.1068.

The entire crypto market is on the rise and so is the stock market driven by high volatility and high growth stocks. The correlation between crypto and growth stocks continues.

The Fed strikes again

Market reaction was a little late, but today’s move was driven by the Federal Reserve’s 50 basis point cut in interest rates yesterday.

A rate cut is meant to make it less expensive for businesses to borrow money, boosting economic activity. This is why stocks are rising today and growth stocks are performing exceptionally well.

The downside is the reason for lowering rates in the first place. The growth rate is slowing in the US and the unemployment rate is rising slightly. While inflation may not be an issue, the unemployment rate and consumer spending trends could point to a recession ahead.

For today, those concerns are behind us, and investors are buying all kinds of asset classes, including crypto.

More rate cuts ahead?

One of today’s most optimistic notes has come out Bank of Americawhich said it expects three more rate cuts totaling 75 basis points by the end of the year.

If this is true, it would be both good for the value of risky assets and probably bad news for the economy.

Blockchain improvements

Ethereum developers have confirmed that they will split the next big blockchain update into two parts. This reduces the risk of errors, and upgrades are expected to begin in early 2025.

One of the reasons Ethereum has lagged behind other blockchains recently is its relatively slow speed and high transaction costs. Updates are meant to improve these two factors, but have been slow to appear on the Ethereum blockchain.

Questions about the future of crypto

Despite today’s huge growth, there are still a lot of questions about the future of cryptocurrency values. Congress has yet to pass crypto legislation that would allow more companies to develop businesses on the blockchain and create a path forward for the use of the token.

There is also a lot of uncertainty about how blockchains and crypto tokens will interact in the future. USD currency has become widely used, even on the Ethereum blockchain, and if this is the medium of transaction, what value will the tokens themselves have?

Bitcoin has developed a niche as a digital store of value, but there is likely to be only one such cryptocurrency.

That will keep me from buying this jump today. I think lower interest rates are generally a warning sign about the economy, and without regulatory certainty and a growing crypto economy, I think the recovery in values ​​will be short-lived.