- Last month’s interest rate cut by the Federal Reserve has spurred the markets.
- U.S. ETFs investing in dividend-paying stocks experienced increased inflows.
- The crypto market surged following the Fed’s interest rate cut.
The Federal Reserve’s recent interest rate cut ignited a rally in both the stock and crypto markets. U.S. dividend ETFs saw a surge in inflows, attracting $3.05 billion in September, according to Morningstar . This coincides with Bitcoin’s 15% gain and a broader crypto market upswing.
This influx of capital into dividend ETFs marks a significant jump from the average monthly inflow of $424 million seen between January and August 2024. The Fed’s rate cut makes income-generating products more attractive to investors anticipating potential market downturns.
This surge in mainstream ETF inflows coincides with bullish sentiment in the crypto market following the Fed’s rate cut. Bitcoin rallied from a $57,627 low less than 24 hours before the Fed announcement, reaching $66,508 before September’s end.
The flagship crypto lifted the rest of the digital asset market, with other top cryptocurrencies experiencing similar rallies. Ethereum, the leading altcoin, jumped 21.6% during the same period, moving from a $2,263 low on September 17th to $2,729 in about ten days.
The crypto market registered a cumulative gain of 16% in that period, with the total market cap surging from $1.966 trillion to $2.291 trillion, according to TradingView data. However, the crypto market experienced a significant pullback last week, which some analysts view as a temporary retracement before a parabolic bull run.
This retracement saw the total crypto market cap drop 8% to $2.111 trillion at the time of writing. Bitcoin also retreated, falling below $60,000 before rebounding to $62,073 at the time of writing.
Read also: Inflation, Interest Rates, and Bitcoin: What Traders Are Watching
Most analysts expect the upward movement to continue due to the alignment of technical and fundamental factors that influence the markets, including the impact of ongoing socioeconomic and geopolitical events.
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