Bitcoin keeps rising on US rate cut bets

Bitcoin rose slightly on Monday, extending its recent gains amid growing conviction that the US Federal Reserve will cut interest rates this week.

However, most alternative cryptocurrencies declined, and emerging concerns about the long-term viability of large corporate investments in Bitcoin – which had been a major source of demand this year – limited its upside.

Bitcoin gained 0.7% to $116,527.3 by 02:01 ET (06:01 GMT), after rising about 5% last week.

Bitcoin supported by rate cut bets but caution remains

Bitcoin has recently seen a gradual recovery from the steep losses suffered between mid-August and early September.

Nevertheless, the token remains well below its August highs, weighed by profit-taking and rising doubts over the expansion of corporate treasury investments in digital assets.

These concerns intensified after Strategy (formerly MicroStrategy – NASDAQ: MSTR) was rejected for inclusion in the S&P 500, raising questions about the sustainability of the digital treasury model. Analysts at J.P. Morgan warned that the lack of further index inclusions undermines the long-term outlook for this investment approach.

This trend has left cryptocurrencies lagging behind the rally seen in other risk assets, particularly equities.

Focus on the Federal Reserve

Crypto markets are also awaiting this week’s Federal Reserve decision, with CME FedWatch data showing a 99.6% probability of a 25-basis-point rate cut, versus just 0.4% odds of no change.

Speculative assets like cryptocurrencies typically benefit from lower rates, as easier monetary policy boosts market liquidity.

Still, traders remain cautious about the longer-term path of monetary easing, with the Fed repeatedly warning of persistent inflation risks. Fed Chair Jerome Powell has yet to commit to a clear easing trajectory, despite mounting pressure from the White House to deliver cuts.