Bitcoin surged above $20,000 on Wednesday, putting an end to its longest run below that level since 2020. Similarly, the euro regained its parity with the US dollar for the first time in a month, possibly because weak U.S. economic data suggested that the Fed could slow the pace of interest rate hikes, weighing on the greenback with the DXY retracting on the news.
Bitcoin Ends its Longest Run Below $20,000 Since 2020
Bitcoin (BTC) finally broke above the $20,000 mark on Wednesday, after trading below that level for almost three weeks, the longest since 2020. The world’s biggest cryptocurrency traded at $20,610 at the time of the writing, while Ethereum (ETH) climbed over 5% to $1,535.
Meanwhile, the euro regained its parity with the US dollar for the first time in a month. The move came after the dollar declined against its European counterpart and the Japanese yen by 0.55% and 0.57%, respectively.
It appears the reason behind the dollar’s slip is the recent poor U.S. economic data which reignited speculations that the Federal Reserve (Fed) is considering slowing the pace of its interest rate hikes. The greenback hit a 20-year high in August, boosted by a series of strong rate increases by the Fed to battle rampant inflation.
Fed Eyeing December to Slow the Pace of Rate Hikes
Although the Fed is very likely to introduce a fourth straight interest rate hike in November, it is now more likely that a softer hike could come in December. Fed governor Christopher Waller said the bank will have “a very thoughtful discussion about the pace of tightening at our next meeting.”
“It’s a continuation of the (dollar) sell-off that we’ve seen since the end of last week. Markets are anticipating a potential slowdown in the pace of Fed hiking. We don’t think that’s going to happen at the next meeting in November, but certainly by December there’s a higher probability they could step down the pace to 50 basis points rather than the 75 basis points we’ve seen recently.”
– Lee Hardman, a currency analyst at MUFG
The U.S. central bank delivered a third consecutive 75 basis points (bps) interest rate hike in September, bringing the target range to around 3%. The Fed’s tight monetary policy somewhat tamed raging consumer prices to 8.2%, according to the latest consumer price index (CPI) print, though still far off from the bank’s target of 2%.
This article originally appeared on The Tokenist