Bitcoin price reaches new high as US banks cleared to work with crypto clients

Bitcoin has successfully broken the $105,000 mark after the Federal Reserve decided to maintain interest rates, with Jerome Powell, the Fed chair, allowing banks to cater to cryptocurrency clients, provided that they manage risks effectively. This surge saw Bitcoin jumping by 3% to trade just above $105,000 on Thursday, rebounding from a dip to $101,800 the day before, hitting its peak in three days.

Powell mentioned in the post-Federal Open Market Committee (FOMC) press conference that banks have the capability to serve crypto customers as long as they comprehend and mitigate the risks involved in the process. It is crucial for banks under the Fed’s supervision to ensure the safety and soundness of their clients’ activities. Currently, Bitcoin stands at approximately 4% below its peak of $109,241 achieved before Donald Trump took office on January 20. Additionally, Ethereum saw a rise of 2.5% to $3,210, while Solana climbed 3.7% to $240, as per data from CoinGecko.

During the FOMC meeting, the Fed chose to keep its benchmark interest rate unchanged, maintaining a target range of 4.25% to 4.50%. This decision was widely anticipated by those involved in interest rate trading. Interest rate traders are also predicting an 82% likelihood of rates remaining steady at the next policy meeting scheduled for March 19. Powell attributed this decision to the continuous economic strength and the presence of persistent inflationary pressures. Despite a significant reduction from the peak of 9.1% in 2022, inflation remains at 2.9% annually, which makes it uncertain if there will be further adjustments in the rates.

Following the Fed’s decision to maintain rates, US stocks closed lower on that day. Technology stocks had a significant impact on the S&P 500, with Nvidia dropping 4.1% and Microsoft slipping 1.1%. This decline came after a technologically-driven sell-off caused by a Chinese startup, DeepSeek, claiming to have produced more cost-effective AI models using less advanced chips than those from US-based OpenAI. Post the Fed’s statement, stock markets initially experienced deeper losses, with the Nasdaq slipping over 1% during afternoon trading.

In a notable move for the digital asset sector, Czech National Bank Governor Aleš Michl proposed adding Bitcoin to the central bank reserves of the Czech Republic. His recommendation to allocate Bitcoin stems from diversifying reserves, gradually increasing gold holdings, and planning to invest in equities. Michl indicated that Bitcoin is a valuable asset to consider due to its zero correlation to bonds, making it an attractive addition to a large portfolio. However, he emphasized that further analysis and discussions are necessary before any decisions regarding Bitcoin allocation are made.