(Bloomberg) — Bitcoin pared a rally that was spurred by expectations of a reduction in borrowing costs by the Federal Reserve leading to greater demand for speculative assets.
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The largest digital currency traded near $60,000 as of 8:50 a.m. in Singapore on Wednesday after climbing as much as 6.4% — the most intraday since since Aug. 8 — to top $61,000 in US hours on Tuesday.
The market-implied odds that Fed policymakers announce a 50-basis-point rate reduction on Wednesday were around 55%. Traders have fully priced in a full quarter-point worth of easing.
“I think a combination of increasing correlation between crypto and traditional markets recently” is driving the price of Bitcoin higher, said Shiliang Tang, president of principal trading firm Arbelos Markets.
MicroStrategy Inc.’s announcement Monday of a sale of convertible notes to purchase more Bitcoin is adding to optimism, Tang said.
Bitcoin has been trading within a relatively narrow range since setting a record high of almost $74,000 in March.
“The market remains relatively thin and it does not take incrementally much on either side to see a move like this,” said Stephane Ouellette, co-founder and chief executive officer of FRNT Financial.
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