Why is Bitcoin surging on Thursday?

The price of several cryptocurrencies moved higher on Thursday after the Fed’s March meeting yesterday, as well as due to some token-specific news. The price of Bitcoin, the biggest cryptocurrency in the world, has increased by around 4.8% since late yesterday afternoon, reaching a high of $28,700. Bitcoin is trading at 28254 at the time of writing.

The meme coin Dogecoin was up close to 8%, and the price of XRP (CRYPTO: XRP) was around 7.2% higher. The Fed concluded its meeting yesterday with a quarter-point hike to interest rates, bringing the Fed’s overnight benchmark lending rate, the federal funds rate, to inside a range of 4.75% and 5%. The Fed also seemed to take a more dovish tone and indicate that its rate-hiking campaign may soon come to an end.

Bitcoin has been retreating since the Fed began raising interest rates to combat some of the highest levels of inflation seen in about four decades. Rising interest rates have made short-term US Treasury bills attractive to invest in, as well as riskier assets like Bitcoin much less favourable.

While the Fed turned more hawkish earlier this month, upon the recent bank crisis, which resulted in several banks collapsing, the central bank has softened its tone. The main reason for this change is that banks are likely to tighten credit in the upcoming months as they further monitor liquidity and also brace for credit normalization in their existing loan portfolios. Fed Chairman Jerome Powell said during his press conference yesterday that this may have a chilling effect on the economy, doing some of the Fed’s work for it.

Dogecoin seems to be benefiting from a tweet from Twitter CEO Elon Musk, who responded to another tweet from a user about visiting the US and watching SpaceX’s upcoming Starship launch. “Okay, but it will cost 3 Doge,” Musk replied.

Given Musk’s influence over the Dogecoin community, it is not surprising to see investors getting excited over a tweet by Elon Musk. XRP seems to be benefiting from the belief that a court ruling is soon coming in a closely followed lawsuit between Ripple, the company that created XRP, and the Securities and Exchange Commission.

The SEC sued Ripple, claiming it sold unregistered securities when it issued $1.3 billion in XRP cryptocurrency many years ago. Many believe Ripple will win the case, setting a precedent that will make it harder for the SEC to classify many cryptocurrencies as securities, which has been a long-running debate between the crypto community and SEC.

The move among cryptocurrencies is largely because of the belief that the Fed will soon pivot and that interest rates are not going to rise to 6%, which seemed like a possibility prior to the banking crisis. Cryptocurrencies, which were started in response to the Great Recession and wider distrust in the mainstream financial system, also tend to rise when traditional banks or currencies like the US dollar struggle.

Observers believe Bitcoin is going to be here for the long haul and will be a good long-term buy. They think XRP and its network have some interesting capabilities and could stand to benefit from winning the SEC case. The cryptocurrency or blockchain network offers anything particularly unique.

BTC/USD is gaining almost 8% versus its overnight lows to challenge nine-month highs. The pair kept the volatility coming as the dust settled on the prior day’s interest rate decision and associated commentary from the Fed.

Despite Fed Chair Jerome Powell giving mixed signals over how and if rate hikes would continue, crypto market commentators argued that the sudden drop that Bitcoin witnessed had been over-the-top. The mood even managed to stay positive despite news that US regulator the Securities and Exchange Commission had begun targeting crypto firms, notably Coinbase, stocks of which fell 20% at the Wall Street open.