Easy Monetary Policy Fuels Bitcoin Rally, Poised for Biggest September Gain in Years

Easy Monetary Policy Fuels Bitcoin Rally, Poised for Biggest September Gain in YearsLooser financial conditions have ignited risk appetite in the market, with Bitcoin poised to post one of its largest gains in September. According to data compiled by Bloomberg, Bitcoin has risen over 10% this month, while it has averaged a 5

Easy Monetary Policy Fuels Bitcoin Rally, Poised for Biggest September Gain in Years

Looser financial conditions have ignited risk appetite in the market, with Bitcoin poised to post one of its largest gains in September. According to data compiled by Bloomberg, Bitcoin has risen over 10% this month, while it has averaged a 5.9% decline in September over the past decade. The smaller cryptocurrency index has surged even more, gaining over 20%.

This rally is largely attributed to accommodative monetary policies from global central banks. This month, the Federal Reserve, the European Central Bank, and the People's Bank of China, among others, have all cut borrowing costs to support economic growth. Investors have swiftly responded to the looser monetary environment, with this risk appetite evident in trades across assets like stocks and gold besides digital currencies.

For the Fed, the correlation between Bitcoin and monetary policy is still the highest, said Sean McNulty, Head of Trading at ArbelosMarkets. Of course, easing policies from other central banks have also been helpful.

As of writing, Bitcoins price is $65,149, marking a 47% rise year-to-date. Caroline Mauron, co-founder of OrbitMarkets, said the $65,000 level is likely to prove firm within hours as a large amount of options contracts are set to expire on Friday. According to a note from cryptocurrency exchange Kraken, failing to decisively break above $65,000 might signal a period of weakness for Bitcoin.

Additionally, the US presidential election may also be giving digital assets a boost. The market anticipates clarity on US cryptocurrency regulations in the months following the election, which could lift market sentiment.

In summary, a combination of factors including easy monetary policies, the upcoming options expiry date, and the potential impact of the US election have driven Bitcoins recent rally. The market expects a strong continuation of the uptrend in the coming months.