Cryptocurrencies had another great day on Wednesday, and the biggest tokens led the market. Bitcoin (CRYPTO: BTC) is once again trading above $100,000, which is a critical psychological level for traders.

As of 3 p.m. ET, in the past 24 hours alone, Bitcoin is up 5.3%, Ethereum (CRYPTO: ETH) has jumped 5.2%, and Dogecoin (CRYPTO: DOGE) is up 7.9%.

The Bureau of Labor Statistics announced this morning the closely watched Consumer Price Index (CPI) was up 2.7% from a year ago, 0.1% higher than in October, but in line with estimates.

Traders are now convinced this will be the final data point needed to cut the federal funds rate to between 4.25% and 4.5% later this month. According to the CME, the odds of a cut are now at 94.9%.

As much as crypto bulls want to say cryptocurrencies are about upending the current financial system, the biggest driver of higher values in crypto is interest rates and the actions of the Federal Reserve. When rates were going up, crypto fell, and now that rates are coming down, crypto is rising again.

That shows crypto is trading more like a speculative asset than based on any fundamentals.

The moves higher in Bitcoin and other cryptocurrencies since early November were all about the election. But that trade seems to be slowing as it gets priced into the market and traders look for the next catalyst. They found it today with lower rates, which could make borrowing less expensive and theoretically drive more economic activity.

That's the same narrative that drove crypto in 2020 and 2021, but reversed when interest rates started rising. We are now back to the old themes, with trading dependent on rates for tailwinds or headwinds.

I will note that while the federal funds rate gets the most attention, the 10-year rate is more important to businesses borrowing money to grow. And that rate is still up sharply in the last three months and flat for 2024.

The changes in interest rates and potential regulation of crypto will be good for the industry, but not in the ways a lot of tokens are moving. I think it's a real utility like lower-cost financial transactions, stock trades on the blockchain, and subscriptions or loyalty programs on the blockchain that will be unlocked from a changing administration.

Some of that value may flow to tokens themselves, but Bitcoin and Ethereum are notoriously slow and costly blockchains, and Dogecoin is a meme coin. It's unlikely these are the places entrepreneurs build real businesses in 2025 and beyond. Those businesses will likely be built on other blockchains.