In summary
- The US Federal Reserve (FED) cut interest rates on Thursday in an expected decision, which could give an additional boost to “risky” assets like Bitcoin.
- The central bank approved a quarter-point cut in interest rates, backed by all 12 Fed voters.
- Bitcoin and other cryptocurrencies have benefited from low interest rates, and the world’s largest Cryptocurrency has seen a surge following Donald Trump’s victory, reaching an all-time high price of $76,677.
The US Federal Reserve (FED) cut interest rates on Thursday in an expected decision that could give an additional boost to “risk” assets such as Bitcoin, which has been rising in recent days, setting multiple all-time price points. after Donald Trump’s election victory.
The U.S. central bank approved a quarter-point cut in interest rates, a move backed by all 12 Fed voters. In September, the Fed cut by 50 basis points in its first cut since aggressively raising rates. rates in 2022.
Bitcoin and other cryptocurrencies have benefited greatly from low interest rates because, like technology stocks, they tend to experience more volatile price movements.
But in 2022, the central bank aggressively raised interest rates in a bid to control inflation amid the COVID-19 pandemic, making such investments less attractive. Now that inflation is under control, the central bank can make it cheaper to borrow money again.
“The Committee views the risks to achieving its employment and inflation goals as approximately balanced,” the Fed said in a statement Thursday.
Matt Mena, cryptocurrency research strategist at exchange-traded fund (ETF) issuer 21Shares, said in a statement provided to Decrypt that the latest haircut could give cryptocurrencies an additional boost.
“The Fed’s 25 basis point rate cut introduces a favorable economic boost for risk assets like Bitcoin,” he said. “Combined with Trump’s pro-crypto policies, this creates a favorable macroeconomic environment for Bitcoin.”
But the election-induced “Trump trade” was already boosting Bitcoin and other cryptocurrencies, as some experts told Decrypt ahead of the Fed’s action.
The world’s largest cryptocurrency is already seeing a surge in the wake of Donald Trump’s victory on Tuesday, given Trump’s plethora of promises to help the industry. BTC is now priced at $76,154, according to CoinGecko data, after an 8% increase in the last seven days. By early Thursday afternoon, BTC rose to the current all-time high price of $76,677.
Edited by Andrew Hayward
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