Bitcoin Pumps 2% as FOMC Makes First Rate Cut in Four Years

The Federal Reserve’s unexpected rate cut sent shockwaves through the financial world, causing Bitcoin to surge dramatically.

Jerome Powell appearing between huge clouds with strong sunlight.
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  • The Fed has finally slashed rates for the first time in four years.
  • Bitcoin has reacted immediately to the news of the rate cut.
  • Economists have dismissed the Fed’s hype, urging investors to ignore the noise.

The Federal Reserve finally made its highly anticipated move today, slashing interest rates by 50 basis points. This marks the first rate cut by the world’s most influential central bank in four years. 

The decision, which had kept markets guessing for weeks, sent shockwaves through the financial world, particularly the cryptocurrency market. Bitcoin, the leading cryptocurrency, surged in response, climbing to a high of $60,900 on CoinMarketCap.

Rate Cut Causes Immediate Bitcoin Surge

The Fed’s decision came after a prolonged period of uncertainty. Though the central bank typically follows a predictable path, this rate cut was shrouded in speculation. Over $55 million in crypto was wagered on the size of the cut on PolyMarket, a popular prediction market built on blockchain technology. 

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Earlier this week, odds of a 50-basis point cut skyrocketed on PolyMarket, exceeding 50%. However, those odds dipped considerably on Wednesday, leading to an even more suspenseful announcement.

The rate cut follows a period of aggressive monetary tightening in 2022, where the Fed raised rates to combat surging inflation. This hawkish stance continued until July 2023. Notably, the European Central Bank (ECB) has already implemented multiple rate cuts this year due to declining inflation within the eurozone. 

Fed’s Rate Hike: Overdue or Overblown?

Some economists argue that the Fed’s move was overdue, suggesting they were too slow to react to the changing economic climate. While the Fed’s decision dominated headlines for weeks, figures like JPMorgan CEO Jamie Dimon downplayed its significance. 

Dimon urged investors to focus on the “real economy” rather than getting hung up on the central bank’s actions. Regardless, the Fed’s move has sent a clear signal, potentially marking a shift in monetary policy and impacting financial markets, including the ever-volatile cryptocurrency sector.

On the Flipside

  • Despite the excitement surrounding the rate cut, it is still uncertain whether this will lead to sustained economic growth.
  • While Bitcoin surged immediately after the rate cut, past patterns suggest that the cryptocurrency market could experience a sharp correction as excitement fades.

Why This Matters

The Federal Reserve’s rate cut signals a shift in monetary policy, driving liquidity toward riskier assets like Bitcoin. This move could strengthen crypto’s appeal as an alternative hedge, attracting more interest from both institutional and retail investors.

Curious about the CFTC’s concerns on crypto prediction platforms and their influence on elections? Read here:
Polymarket in Trouble? CFTC Raises Brows at Election Bets

This article explores the predictions leading up to the FOMC meetingโ€”see how many we got right:
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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a reporter for DailyCoin covering all Ripple (XRP) developments and market analysis. Kyle's has major XRP holdings, moderate in Solana and Ethereum, and minor holdings across 20+ other cryptocurrencies.

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