eToro: Crypto Markets Surge 10% on Fed Rate Cut

Simon Peters, a Market Analyst at eToro, reports that cryptocurrency markets experienced a significant boost of 10% last week. This rally was primarily driven by the US Federal Reserve's decision to lower interest rates by 50 basis points, marking the first-rate reduction in four years. The federal funds rate now sits between 4.75% and 5.00%, down from the previous range of 5.25% to 5.50%. This adjustment aligns with the Federal Reserve's progress toward achieving its 2% inflation target, a goal that has been central since their meeting in July.

Bitcoin and Spot Bitcoin ETFs React Positively

Bitcoin saw a 6% increase, pushing its value to $64,000 — levels not seen since August 26. Spot Bitcoin ETFs also benefited, attracting an impressive $412 million in inflows. The Federal Reserve's release of the "dot-plot," which provides long-term interest rate projections, suggests that the federal funds rate could drop further to a range of 4.25%-4.50% by the end of the year. This outlook implies that additional rate cuts could be announced during the upcoming Federal Reserve meetings in November and December.

Market Expectations for Future Rate Cuts

According to data from CME FedWatch, market participants expect the federal funds rate to decline to 4.00%-4.25% by year-end, representing a total decrease of 75 basis points from current levels. Investors are eagerly awaiting Friday's Personal Consumption Expenditures (PCE) inflation data, which is the Federal Reserve's preferred measure of inflation. A lower-than-expected PCE figure could further fuel market optimism, increasing the likelihood of more aggressive rate cuts shortly.

Growing Crypto Adoption in the UAE

On a related note, a recent eToro survey sheds light on the growing adoption of cryptocurrencies in the United Arab Emirates (UAE). The survey reveals that 74% of retail investors in the UAE now hold crypto assets, reflecting the nation's forward-thinking regulatory environment and the increasing appeal of crypto as a diversification strategy. The survey also highlights the key factors driving this trend: 40% of investors cite the potential for high returns, 36% believe in the transformative potential of cryptocurrencies, and 31% express confidence in blockchain technology's reliability.