“Major cryptocurrencies like BTC, XRP, SOL, and DOGE exhibit steady gains following the Fed’s decision, with the Dollar Index showing resilience.”

Dovish Fed Sparks Crypto Rally, but Dollar Strength Could Pose Headwinds

Major cryptocurrencies, led by Bitcoin, have resumed a steady upward trajectory following Wednesday’s Federal Reserve rate cut, though the greenback’s resilience may limit gains.

The Fed lowered interest rates by 25 basis points to 4% and signaled the possibility of more aggressive easing over the next 12 months, setting the stage for renewed bullishness in crypto markets.

Bitcoin Leads the Charge
Bitcoin (BTC) topped $117,900, the highest level since August 17, breaking out of a sideways pattern that began last Friday. The rally marks a continued recovery from early September lows near $107,200. As of writing, BTC was up nearly 1% over 24 hours.

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, rose 2.7%, remaining confined within a four-week narrowing price range, known as a contracting triangle. Other major tokens—including Dogecoin (DOGE), Solana (SOL), and BNB—gained more than 4%, while XRP climbed roughly 3%, building momentum after a bullish descending triangle breakout.

Institutional Developments Boost Solana and XRP
Solana briefly reached $245, approaching its weekend high, as CME Group announced it will offer SOL options starting October 13, alongside XRP options on the same day. These products are expected to enhance institutional participation and improve exposure management.

“The Fed’s dovish stance is creating an asymmetric setup for Bitcoin,” said Matt Mena, crypto research strategist at 21Shares. “While the 25bps cut sparked the rally, the trajectory implied by the Fed’s dot plot may drive Bitcoin toward new highs into year-end. We could see BTC above $124,000 by late October, with Ethereum topping the $5,000 level.”

Dollar Resilience May Limit Upside
Despite dovish Fed signals, the Dollar Index (DXY) has bounced to 97.30, recovering from its July 1 low of 96.37. The dollar’s resilience likely reflects Chairman Jerome Powell’s caution that rapid successive rate cuts are not guaranteed, alongside ongoing quantitative tightening and persistently high inflation.

A stronger DXY could tighten financial conditions, potentially curbing gains in BTC and other risk assets.

Tail Risk Pricing on the Rise
Market participants are increasingly pricing in tail risk—low-probability, high-impact events such as market crashes. Crypto financial platform BloFin noted heightened demand for BTC tail protection following recent interest rate uncertainty.

“As a highly rate-sensitive asset, BTC is seeing more interest in short-dated put spreads, signaling growing concern over downside tail events,” BloFin told CoinDesk.

Put spreads are designed to profit from declines in the underlying asset, underscoring that sophisticated traders are factoring potential shocks into crypto markets.

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