Last week, the US Federal Reserve cut interest rates for the first time since the beginning of the COVID-19 epidemic, causing waves across the bitcoin market.
Following the announcement on September 19, 2024, the value of major cryptocurrencies, including the most popular one, Bitcoin, increased rapidly with Bitcoin hitting over $64,000.
US Fed Cuts Interest Rate by 0.5%; What It Means
The US Federal Reserve announced a 0.5 percent cut in its benchmark interest rate on Wednesday, September 18, 2024. This was the Federal Reserve’s first rate drop in over four years. The decision comes only months before the November presidential election.
The Fed lowers interest rates to stimulate economic growth, as lower financing costs can encourage borrowing and investing. This move from the Federal Reserve comes with some implications.
Firstly, an interest rate cut implies that businesses can take on debt for less money and use that money to reinvest in other productive ventures. Secondly, when interest rates decrease, investors are more likely to shift their funds from savings accounts and different types of investments to stocks and other volatile assets like cryptocurrencies.
What Does This Mean for the Crypto Market?
The announcement contributed to increasing the price of cryptocurrencies, with Ethereum rising beyond $2,400 and Bitcoin surpassing $64,000. Though some investors promote their usage as safe havens, cryptocurrency asset values generally climb in response to indicators of monetary rate relaxation.
The global head of over-the-counter (OTC) trading at cryptocurrency investment firm GSR, Spencer Hallarn, stated: “In theory, it could indicate that the Fed is reducing by 50 because they are concerned about something.” “If they believe we are on the verge of a recession, they may feel compelled to reduce swiftly,” as Bloomberg reported.
Are the prices of cryptocurrencies going to keep going up until the end of the year? Will we witness a new all-time high for Bitcoin in 2024? Only time will tell.
