Rate Cuts — What It Means For Crypto

Yesterday, the Fed made its first rate cut since 2020—by a significant 50 basis points. It’s an aggressive move, far more than what most expected.

Bitcoin surged on the news. It’s trading above 62k, and the excitement is huge across the crypto space. But I’m staying cautious.

While many want to simplify it—“lower rates = higher Bitcoin,” for example—the reality is more complex. Lower rates create a risk-on environment, making assets like Bitcoin more attractive. But it’s not a magic formula.

The key question isn’t just about rates but the broader economy. Can the Fed operate a soft landing? That means avoiding a recession while maintaining inflation.

If they can, the current pump might have legs. But if we start seeing signs of a recession, things could get messy, especially since this would happen despite the significant rate cut step.

Tech & Crypto As Main Beneficiaries?

Many analysts see the AI and tech sectors as significant beneficiaries of the rate cut. These industries rely on capital-intensive innovation, and lower borrowing costs make it easier for companies to access funding for research and development. Subsequently, it accelerates growth in these fields.

This shift can also have a ripple effect on the crypto market. Given the close relationship between tech, AI, and blockchain innovation, as these sectors flourish, it could create a more supportive environment for crypto, further enhancing its adoption and growth potential.

So, in the short term, this move will likely fuel Bitcoin’s rally.

But long-term, we must watch how the broader economy reacts, especially U.S. job data. Don’t get caught up in the oversimplified hype.