Bitcoin climbs to highest since August in post-fed crypto rally

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FILE PHOTO: Representations of the cryptocurrencies Bitcoin, Ethereum, DogeCoin, Ripple, Litecoin are placed on the PC’s motherboard in this illustration taken June 29, 2021. (Reuters)

Bitcoin hit its highest level since August as investors interpreted Federal Reserve Chairman Jerome Powells’ comments on inflation progress as a sign that a less stringent monetary policy environment was on the way.

The top token rose 2.4% and traded at $23,871.06 as of 11:23 a.m. Thursday amid larger crypto gains, including a 3% rise in second-tier Ether. A gauge of the top 100 digital assets added 37% this year.

A range of investments from stocks to bonds and crypto rose after Powell said the disinflation process was underway. It has not aggressively pushed back a rally in global markets this year that has eased financial conditions, which may make it harder to moderate price pressures.

He was speaking after the Fed downgraded as expected to a quarter-point interest rate hike. Powell said policymakers expected “a few” more rate hikes before pausing their aggressive tightening campaign.

“Cryptocurrencies are rallying on risk sentiment after dovish comments from the Fed overnight,” said Cici Lu, founder of Venn Link Partners, a blockchain advisor. She added that she has detected more purchases by institutional clients in recent weeks.

Digital assets are rebounding from the steep losses of the past year, a period marked by blowouts like that of the FTX exchange.

“Usage, adoption and innovation remain a much more positive picture than prices and investor sentiment reflected,” said Richard Galvin, co-founder of fund manager Digital Asset Capital Management.

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