The value of Bitcoin and crypto stocks increases following the Federal Reserve's reduction of interest rates by 0.5%.

On Thursday, the broad market experienced a rally, and cryptocurrencies were among those that rose, following the Federal Reserve's decision to cut interest rates by half a percentage point the previous day, marking the first reduction in over four years.

According to Coin Metrics, the price of Bitcoin was recently higher by 3.5% at $62,417.48, building on a rally that began before the central bank decision on Wednesday. Bitcoin, like stocks, initially surged and then retreated as traders digested the news.

In recent weeks, Ethereum, which has been struggling to surpass Bitcoin, experienced a nearly 5% increase in value. Meanwhile, its main competitor, the ERC-20 token, saw a significant jump of 7.5%.

Bitcoin exchange operator Coinbase advanced 4%, while other stocks linked to the price of bitcoin rose by 5% in early trading on Thursday.

Some investors believe that the Fed's decision to reduce interest rates by a full percentage point rather than just a quarter point indicates that policymakers are more concerned about the economy than the markets suggest. Meanwhile, others are more focused on the positive impact of easier borrowing costs on liquidity, which is likely to boost prices.

Bitcoin functions as both a hedge and a risk asset, and at present, it is more closely linked to the stock market than it is to gold.

Despite Bitcoin experiencing a 6% increase in September, which is typically its poorest month, Yuya Hasegawa, a crypto market analyst at Bitbank, cautioned that the cryptocurrency is not yet out of danger. He pointed out that the outcome of the Bank of Japan's policy meeting, which began on Thursday, could have a significant impact on Bitcoin's future.

"The BOJ is likely to keep the policy rate this time around, but signs of additional rate hikes could boost the Japanese yen and trigger a yen carry trade, which could result in a sell-off in the Japanese stock market and a risk-off sentiment that could cascade into the crypto market. Bitcoin has some time until the BOJ makes the decision and could extend its gain during Thursday's U.S. session. The next likely short-term target is around $65,000."