BTCs price went up after the US Federal Reserve lowered borrowing rates. This is the first time rates were cut since the COVID-19 pandemic slowed down the economy four years ago. The central bank lowered its key interest rate by 0.5%, which has affected Bitcoin and other currencies.
The rate cut directly affected BTCs price. The Federal Open Market Committee (FOMC) voted 11 to 1 to lower the federal funds rate to a range of 4.75% to 5%, after keeping it at its highest point in over 20 years for more than a year. As a result, BTCs price rose 2.55%, reaching $62,101 at the time of the report.
People reacted differently to the lower rates. Spencer Hallarn, who is the head of Over-the-Counter Trading at GSR, a crypto firm, believes the rate cut could show concerns about the economy. He said cutting the rate by 50 basis points might mean the Fed is worried about something. Karim Dandashy, an over-the-counter trader at Flowdesk, agreed, calling the market’s quick reaction to the cut a “knee-jerk reaction,” with some relief after weeks of uncertainty about whether the cut would be 25 or 50 basis points.
See Also: U.S Bitcoin ETFs See Net Inflows Again
BTCs Price Predictions After Rate Cut
Hedge fund manager Anthony Scaramucci has a hopeful outlook for Bitcoin, predicting that its price could reach new highs due to the rate cut and the expected clear rules about cryptocurrencies in the US. He thinks these factors could help BTCs price rise even more. This lines up with the Federal Reserve’s ongoing focus on key economic signs, like inflation and job growth, which they mentioned in their statement after the rate cut.
The Federal Reserve also said they might make more changes to interest rates based on how the economy performs and the risks involved. They pointed out that inflation is still higher than they want, and job growth has slowed. In their updated forecast, officials raised their estimate for the unemployment rate at the end of 2024 to 4.4%, up from their earlier prediction of 4%, suggesting they expect the economy to slow down in the months ahead.
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