WASHINGTON / LONDON (IT BOLTWISE) – The US Federal Reserve’s recent interest rate cut could invigorate the crypto market. As the Federal Reserve continues its course of monetary easing, Bitcoin and other cryptocurrencies are poised for potential appreciation. The decision comes amid a slowing U.S. economy and falling inflation.
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The Federal Reserve has cut interest rates again, which could have far-reaching effects on financial markets. With a reduction of 25 basis points, the new target corridor is now between 3.75 and 4.00 percent. This decision follows a similar move in September and signals a continuation of monetary easing by the US Federal Reserve.
The interest rate cut comes in an economic environment characterized by falling inflation and a slowing economy. Weaker economic data and declining price increases had already increased expectations of such a measure in advance. According to the CME FedWatch Tool, over 90 percent of market participants expected this move.
Falling interest rates significantly change the dynamics on the capital markets. Capital that was previously tied up in safer assets such as bonds could now increasingly flow into riskier assets such as cryptocurrencies. The crypto market, which traditionally benefits from phases of monetary easing, could thus receive an additional boost.
Although the initial reaction in the crypto market was muted, the interest rate cut could provide additional tailwind for Bitcoin and other digital currencies in the coming weeks. Bitcoin is currently trading at around $111,000, down around three percent compared to the previous day. Ethereum is just below the $4,000 mark, down around four percent in the last 24 hours.
However, the long-term impact of the rate cut on the crypto market could be positive as investors look for higher returns. Experts expect demand for cryptocurrencies could increase, especially if traditional markets continue to be under pressure. The Fed’s decision could therefore serve as a catalyst for a new phase of growth in the crypto sector.
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