Bitcoin surged past $117,000, its highest level since late August, as cryptocurrencies attempt to break free from the deep corrective phase that has dominated recent weeks.
The move comes with improved flows into crypto-related products and no major long liquidation events, which leaves room for further upside in the near term.
The main driver of risk appetite is today’s Federal Reserve decision. Markets widely expect the central bank to initiate its easing cycle with a 25-basis-point cut, according to CME’s FedWatch Tool, which also indicates a 70% probability that total cuts will reach 75 basis points before year-end.
Optimism over this trajectory has not only underpinned Bitcoin but also sent the NASDAQ 100 to fresh record highs yesterday, reflecting how liquidity expectations are lifting the broader risk spectrum.
The updated dot plot and Jerome Powell’s communication will be critical in shaping forward guidance, with investors weighing whether the Fed will leave the door open to consecutive cuts or remain cautious in light of inflation still running above target.
The internal divisions within the Fed add an additional layer of complexity. According to analysts cited by Wall Street Journal, Powell faces pressure from Trump-appointed governors pushing for deeper cuts while regional Fed officials remain wary of loosening policy too aggressively. With Powell’s term expiring in May, the meeting is also being read as a test of the institution’s independence and cohesion.
Geopolitics is reinforcing this uncertainty. According to the Wall Street Journal, U.S. and Chinese negotiators in Madrid reached a preliminary deal over TikTok’s future, potentially averting a U.S. ban. The framework envisions shifting ownership to a consortium of investors, although the sensitive issue of the algorithm remains unsettled. Beijing’s move reflects its bid to secure a Trump visit, but it has also balanced this gesture by targeting U.S. chipmaker Nvidia to avoid appearing weak domestically.
The deal, if finalized, could help ease trade-related tensions, but the persistence of disputes over tariffs, trade balances, and fentanyl suggests that risks remain embedded in the outlook. For markets, any breakthrough could complement Fed easing and support the rally in risk assets, while failure would leave equities and crypto vulnerable to renewed volatility.
In the corporate sphere, pressure is also visible on companies tied to the crypto narrative. Strategy’s diluted share mNAV fell to 1.43, the lowest since February 2024. This diminishes the outlook for sustaining a premium relative to its Bitcoin holdings may weaken the broader argument for treasury companies as vehicles for crypto exposure – even bitcoin is near its all-time-high. If this dynamic persists, it could limit speculative inflows and place a ceiling on enthusiasm, which might result in a total collapse in the market where these companies might be forced to sell their holdings.
