Bitcoin above $123,000, but stays below recent record highs

Bitcoin was trading 0.6% higher at $123,347.5, after volatile trading in recent sessions

Bitcoin rose above $123,000 on Thursday, but stayed below record highs hit earlier this week, as investors assessed the potential for more U.S. central bank rate cuts this year.

Optimism over continued inflows into U.S.-listed bitcoin exchange-traded funds (ETFs) has also helped to drive prices of the world’s most popular cryptocurrency by market value higher.

By 12:38 GMT, Bitcoin was trading 0.6% higher at $123,347.5, after volatile trading in recent sessions.

Minutes from the central bank’s September policy meeting revealed that a “substantial majority” of officials saw scope to lower borrowing costs again this year, though several policymakers cautioned against moving too aggressively given lingering inflation risks.

Some participants preferred to keep rates on hold until there was clearer evidence of easing price pressures and a firmer slowdown in the labour market, the minutes showed.

Meanwhile, traders have been gauging broader economic uncertainty, including the ongoing U.S. government shutdown that has now entered its second week. The deadlock in Washington has delayed economic data releases, depriving bank officials of figures often used to help calibrate monetary policy.

Against this backdrop, the U.S. dollar index has climbed more than 1% over the past one-week period, as investors sought out traditional safe-haven assets.

The stronger dollar has challenged the narrative underpinning recent “debasement trades” – bets that softening fiat currencies would boost assets such as Bitcoin and gold.

With real yields softening and gold still near record highs, Bitcoin remains anchored by the hard-asset narrative — an instrument of programmed scarcity in an age of policy uncertainty, Iliya Kalchev, Nexo Dispatch analyst, said.

Kalchev added: The consolidation at current levels reflects not exhaustion but absorption, with capital flows and limited supply reinforcing one another.