The US Federal Reserve has opted to cut interest rates by 50 basis points in a monumental development. The move is a massive moment for the US economy, as it sees the Central Bank cut rates for the first time in four years. The move negatively affected many stocks on the market, seeing them dip just before closing time. However, the move had a temporary adverse effect on Bitcoin, with the leading cryptocurrency rising following the Fedâs interest rate cut.
Bitcoin saw a brief spike to $61,000 just minutes after the Fed announced that they would slash interest rates. However, since that spike, BTC is back below $60,000. The coin is up 4% in the past seven days, and the crypto market is now split on being bullish or bearish following the rate cut. There is some speculation that the king coin will reach a new all-time high in the final months of 2024. However, it is unclear what part more Fed interest rate cuts will play in that.
Will Bitcoin Spike Following the Fedâs Interest Rate Cuts?
Source: Review Magazine
Some market experts predicted that following the Federal Reserve cutting interest rates, more liquidity will hit the market. This growth in liquidity could provide the pump Bitcoin needs to rise to new highs this Fall.
BitMEX founder Arthur Hayes is a believer that BTC will rise following the rate cuts:
âThey will ramp up the money printer and dramatically increase the money supply. That leads to inflation, which could be bad for certain types of businesses. But for assets in finite supply like Bitcoin, it will provide a trip at lightspeed 2 Da Moon!â
Also Read: Bitcoin To Hit New All-Time High in October 2024, Analyst Confirms
Furthermore, the return of momentum behind Bitcoin ETFS could pump Bitcoin, as demand grows for the leading crypto by market cap. A recent single-day addition saw $250 million worth of Bitcoin added, the highest in over a month. This surge in demand helped push Bitcoinâs price above $61,000 in September.
The Fed deciding to start interest rate cuts is likely the first in a series of a few consecutively. The effort is expected by many to continue into 2025. During a recent speech in Jackson Hole, Wyoming, Fed Chair Jerome Powell expressed confidence that inflation had been overcome. However, there is still a long way to go to make up ground for the last several years of high rates. Bitcoinâs behavior will be important to track as interest rates continuously slim down.
