The Federal Reserve cuts interest rates by 25 basis points, cryptocurrency
The Federal Reserve held its meeting in the past couple of days and finally announced its last policy decision for 2024: a 25 basis point rate cut, bringing the interest rate to between 4.5% and 4.75%, which is about what everyone expected. This marks the third consecutive rate cut by the Federal Reserve since September. Moreover, the Federal Reserve also stated that the number of rate cuts next year will be fewer than previously thought, only three times, unlike the four times mentioned back in September.
In fact, Wall Street had already guessed that the Federal Reserve would cut rates by 25 basis points this time, with high confidence; the Chicago FedWatch tool showed a 99% probability of a rate cut.
This rate cut occurred after Trump was elected President of the United States. The rate cut of 50 basis points in September was the first time in four years, at which point policymakers felt that inflation could stabilize.
Federal Reserve Chairman Powell stated that they are not in a hurry to cut rates and that it should be done gradually. Goldman Sachs analysts also quoted the President of the Cleveland Federal Reserve, saying that the economy is recovering, the labor market is strong, and inflation is high, so a period of tight monetary policy must be maintained to keep inflation stable at 2%.
Speaking of cryptocurrency, Min Jung, an analyst at Presto Labs, mentioned that the rate cut is good for Bitcoin prices, but the market had already anticipated a 25 basis point cut in December, so the actual impact may not be that significant. Now, everyone is focused on the December FOMC meeting and Powell's comments on future rate cut plans. If there are any surprises, it could impact Bitcoin prices.
This rate cut just happens to be before Trump's inauguration, and the cryptocurrency market might see another surge, especially if Trump indeed implements a strategic Bitcoin reserve plan. Recently, Bitcoin prices soared to a new high of $108,268 before dropping a bit, now at $103,919, having fallen more than 2% in the last 24 hours, as everyone is waiting for good news regarding the Federal Reserve's rate cuts and the Bitcoin reserve plan.
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