After the September 18 FOMC meeting, the Fed cut interest rates for the first time in four years. As a result of the 50 basis point rate cut
After the September 18 FOMC meeting, the Fed cut interest rates for the first time in four years. As a Result of the 50 basis point rate cut, Bitcoin price hit $62,000 in the late New York session. Let’s understand why this happened.
Here’s Why Bitcoin price Jolts After Fed’s Interest rate cut?
For the past four years the target rate was in the 500 to 525 range, but after Wednesday’s rate cut, it has dropped to 475 to 500 range. Moreover, there are talks of another 50 bps rate cut by the end of 2024.
A drop in interest rates by 50 bps means it is that much cheaper for investors to borrow. So, a decline in the rates would promote borrowing and spending, which is bullish for risk-on assets like cryptocurrencies or stocks.
But the markets do not always wait for the event, many investors anticipate the outcome and prepare ahead. As a result, BTC price saw a 16% rally since the September 6 bottom.
The 50 bps rate cut is already priced in the markets and any deviation from the预期 could lead to a massive sell-off in the markets. However, if the rates are cut by 50 bps as anticipated, then we could see a continuation of the bull run.
Additionally, historical data shows that rate cuts are bullish for BTC.
Will BTC Continue 2023 Bull Run?
Well, the Fed cut interest rates by 50bps, does that mean Bitcoin price will rally? Will the bull run continue? Not really. There are multiple key factors that affect BTC.
One event that could disrupt the ongoing bullish outlook is Japan’s interest rate decision on Friday.
In July, when the Bank of Japan (BOJ) raised interest rates by 25 bps, it caused a panic closing of the YEN-USD carry trades, leading to a financial market meltdown. The central bank’s Kazuo Ueda confirmed that there wouldn’t be any imminent rate hikes, which resulted in recovery of the financial markets. As a result, market participants are closely watching this event to get a read on Bitcoin’s directional bias.
Regardless, investors expect Bitcoin price forecast to send BTC beyond $65,000 and retest the $70,000 psychological level.
Frequently Asked Questions (FAQs)
1. Why did Bitcoin's price surge after the Fed's interest rate cut?
A drop in interest rates by 50 bps means it is that much cheaper for investors to borrow. So, a decline in the rates would promote borrowing and spending, which is bullish for risk-on assets like cryptocurrencies or stocks. But the markets do not always wait for the event, many investors anticipate the outcome and prepare ahead. As a result, BTC price saw a 16% rally since the September 6 bottom.
2. Will the Fed's rate cut ensure a continued bull run for Bitcoin?
Well, the Fed cut interest rates by 50bps, does that mean Bitcoin price will rally? Will the bull run continue? Not really. There are multiple key factors that affect BTC. One event that could disrupt the ongoing bullish outlook is Japan’s interest rate decision on Friday. Regardless, investors expect Bitcoin price forecast to send BTC beyond $65,000 and retest the $70,000 psychological level.
3. What potential event could disrupt Bitcoin's bullish outlook?
One event that could disrupt the ongoing bullish outlook is Japan’s interest rate decision on Friday. In July, when the Bank of Japan (BOJ) raised interest rates by 25 bps, it caused a panic closing of the YEN-USD carry trades, leading to a financial market meltdown. The central bank’s Kazuo Ueda confirmed that there wouldn’t be any imminent rate hikes, which resulted in recovery of the financial markets. As a result, market participants are closely watching this event to get a read on Bitcoin’s directional bias.
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