Fed Cuts Speculation Lifts Sentiment, Bitcoin Surged to Record High

The U.S. Dollar Index (DXY) fell to 97.70, its lowest level since late July, as markets ramped up expectations for Federal Reserve rate cuts. After holding relatively steady earlier, the dollar extended its slide following softer-than-expected CPI data and mounting political pressure on the Fed.

Investors now price in a near certainty (about 94%) of a 25 basis-point cut in September, with some even speculating on a larger 50 bps move or as many as three cuts in 2025.

Equities Soar, Bond Yields Ease

Global equities surged on the shift in sentiment, led by strong gains in U.S. markets. The S&P 500 and Nasdaq both closed at fresh record highs, while Treasury yields declined — the 10-year yield slipped to 4.22% and the 2-year yield eased to 3.67%. This reflects growing expectations for further monetary easing.

Similarly, the Japanese yen posted a strong rebound on Thursday morning against the U.S. dollar and other major currencies, largely driven by the view that the interest rate differential between the U.S. and Japan will narrow.

Bitcoin Climbs to All-Time High

In the crypto space, Bitcoin surged to a record high above $124,000, fueled by the prospect of looser monetary policy and supportive U.S. regulatory developments. Ethereum also rallied sharply, nearing $4,800 — its highest level since November 2021 — as broader risk sentiment improved.

“The crypto rally is being fueled by optimism over potential Fed rate cuts and robust institutional buying, further boosted by Trump’s favorable stance on crypto regulation,” said Ultima Market Analyst Shawn.

BTCUSD, Day-Chart | Source: Ultima Market MT5

Shawn noted in one of his technical analysis reports that Bitcoin could still have room for another leg higher, with the next target seen near the 161.8% Fibonacci extension, around the $130,000–$131,000 area.

Still, he emphasized that the move will largely depend on how market sentiment unfolds, particularly following today’s U.S. Producer Price Index (PPI) release, which could influence the near-term outlook for Federal Reserve policy.

What’s Next on Market?

• U.S. Producer Price Index (PPI) on Thursday could reveal whether upstream pricing pressures are easing or building—a key signal for future Fed policy.
• Crypto watchers will be watching to see if Bitcoin can sustain upside momentum or faces resistance near $125K.
• Political dynamics are in focus as Treasury Secretary Scott Bessent and President Trump continue to pressure the Fed for aggressive cuts.

Disclaimer

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