Bitcoin FOMC Reaction? The Fed slashed rates by 50 basis points, fueling demand for risk-on assets like Bitcoin. Does this mean crypto markets will experience a bull run in Q4?
On September 18, the United States Federal Reserve surprised everyone, including Bitcoin investors.
Against all odds, they choose to slash rates by 50 basis points.
According to trackers , this was less than a 30% probability.
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Many expected the central bank to chop interest rates by 25 basis points. As of yesterday, the odds for this reduction were a massive 63%.
Bitcoin Rises After Federal Reserve Rate Cut
And when the bank chose this path, crypto prices rose.
Trading volume also exploded as market participants tried to analyze what was happening.
We know that the Federal Reserve benchmark rate is now down to 4.75 to 5.00%, a seismic shift in monetary policy.
In a presser 30 minutes after the rate announcement, Jerome Powell was dovish, saying inflation will likely continue to ease towards the 2% target .
The bank is now embarking on “recalibration” efforts.
Interestingly, the central bank is pivoting away from managing inflation to protecting the economy.
By slashing interest rates, the FOMC sought to prevent the labor market from weakening as the central bank also looked to provide a “soft landing” for the economy.
The labor market is strong, and unemployment stood at just 4.2% as of August 2024 data. At the same time, GDP figures remain resilient.
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Bitcoin FOMC Reaction: Will Q4 2024 Be “Risk-On”?
The Federal Reserve considers the economy “booming,” so the rate cut also signals the beginning of what most analysts say will be a “risk-on” environment in Q4 2024.
For this reason, the focus is on Bitcoin and the broader crypto market scene.
Bitcoin price
Price Trading volume in 24h Last 7d price movement remain firm, back above $60,000 and confirming gains of September 13.
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As interest rate falls and a new monetary policy regime takes shape, especially ahead of the charged presidential election, BTC may benefit.
Arthur Hayes, co-founder of BitMEX, is specifically upbeat on crypto prices, though critical of the timing of the rate cut.
In his view, Bitcoin prices will continue rising, giving consumers a sense of wealth ahead of the November polls.
For this reason, there is a high probability that going on to Q4 2024, the general investment environment will be “risk-on” as purse strings are loosened.
Bitcoin could be a major beneficiary of the falling cost of borrowing, stronger labor markets , and improved economic conditions.
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Like in the 2019 through 2021 bull cycle when interest rates fell to near zero, Bitcoin could climb higher by the end of the year, perhaps even printing fresh all-time highs above $74,000.
It only makes sense.
The Federal Reserve projects even more rate cuts throughout 2026, which could funnel demand to BTC, accelerating the bounce from August and September 2024 lows.
However, the pace of the uptrend will also be influenced by the outcome of the presidential election in November 2024.
Already, Trump thinks the 50 basis points indicate deeper problems in the economy now that the economy could heat up with an accommodative policy, forcing inflation higher.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
