The Fed announced what everyone was waiting for. The US central bank has begun a series of interest rate cuts. How are cryptocurrencies reacting to this? With gains!
Fed and interest rate cut
Before the US data was announced, the bitcoin rate… intrigued investors. That’s probably the most subtle word I can use. Although we saw cautious increases on Tuesday, these were corrected on Wednesday. The attempt to rebound only began today, and in the evening.
Half an hour before the Fed’s decision was announced, the market assumed that the interest rate cut would be 50 basis points (61% probability).
It turned out that the markets had bet correctly. The Fed authorities cut interest rates by a whopping 50 basis points!
The Bitcoin price immediately began to rise and broke through USD 60,000 again.
Currently, one bitcoin costs $60,370, which translates to a 4% jump in price over 7 days. Since yesterday, the rate has fallen by 1.3%, but it is possible that this loss will be quickly made up.
One ether costs USD 2,323, which means a decline of 1.4% within a week and a decline of 1.9% over 24 hours.
What does this mean?
The Fed’s interest rate cut starts a cycle of quantitative easing. What does this mean for markets? First of all, access to cheaper money. Lower interest rates mean lower interest rates on loans. This means that investors are better off taking out loans for investments, including those on stock exchanges.
For investors who invest in risky assets, the Fed’s return to rate cuts could signal a bull market.
Of course, it is too early to predict how BTC or ETH will behave in the short term. In the longer term, the shift from tightening to quantitative easing is good news for crypto investors. It is possible that the main phase of the bull market has officially begun today.
This text is not investment advice. Always invest at your own risk.
