The Federal Reserve's sharp interest rate cuts stimulated demand for risky assets. Bitcoin once broke through $64,000, hitting a nearly three-week high

Bitcoin hit a three-week high on Friday as global stock markets rose as the Federal Reserve's aggressive interest rate cut had a ripple effect on the market.

As of press time, Bitcoin is trading at $62,974.12 per ounce, and the digital token once rose to $64,133.32.

The Fed cut borrowing costs by 50 basis points, its first rate cut in more than four years. But Fed Chairman Jerome Powell was careful not to commit to a similar pace of future rate cuts, saying they would be guided by economic data. That nuanced outlook dampened market reaction during Wednesday’s U.S. trading session.

Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for digital asset derivatives trading, said: “The positive start of the easing cycle is good news for risk assets such as Bitcoin. It will take a few hours for the market to see the big picture and start to reflect the improved outlook.”

Opinion was split ahead of the Fed meeting over whether officials would opt to raise rates by a quarter percentage point or a half percentage point. Powell and his colleagues are trying to keep the U.S. economy strong as risks to the labor market and inflation become more balanced.

“The focus will quickly shift to the size and scope of this cycle,” said David Lawant, head of research at FalconX. “From here on out, the most important factor to watch will be the trajectory of economic activity.”

Lavant said the correlation between cryptocurrencies and traditional investments like stocks has risen recently, suggesting that macroeconomic variables have been influencing the digital asset market.

On the other hand, U.S. Treasuries fell, which may reflect Powell's cautious signal on the scale of future monetary easing.

“The Fed’s ongoing response function remains unclear. They are still on an uncharted path,” Chris Weston, head of research at Pepperstone Group, wrote in a note.