4 Bitcoin Related Stocks in Focus as Fed Readies Rate Cut
Cryptocurrencies have suffered lately owing to the broader market selloff earlier this month, triggered by fears of a recession. However, fears have alleviated over the past two weeks, following the release of a spate of positive economic data that showed the U.S. economy is still holding strong.
On Aug 21, Bitcoin (BTC) rebounded from its earlier lows and was trading above $60,770 after the release of the minutes of the Federal Reserveâs Federal Open Market Committee (FOMC) meeting that hinted at the first rate cut in September.
This is likely to give Bitcoin a boost, as lower interest rates generally benefit growth-oriented assets, such as technology stocks, consumer discretionary goods, and cryptocurrencies.
Given this situation, Bitcoin-oriented stocks like NVIDIA Corporation NVDA, Interactive Brokers Group, Inc. IBKR, Robinhood Markets, Inc. HOOD and Block, Inc. SQ are likely to benefit once the crypto rally resumes.
Rate Cuts to Help Crypto Market
The minutes of the FOMCâs July meeting revealed that the Federal Reserve is gearing up to start its easing cycle with a likely 25-basis point rate cut in September. The likely rate cut stems from the Federal Reserveâs confidence that the U.S. economy continues to be resilient and inflation is declining significantly to reach its 2% target.
Lower interest rates typically decrease the opportunity cost of holding assets that donât generate yields, like Bitcoin and other cryptocurrencies. In an environment with lower interest rates, investors are more likely to pursue assets that offer higher potential returns, even if they carry more risk.
This shift makes cryptocurrencies, known for their historical volatility and potential for significant returns, more appealing to a wider range of investors.
Bitcoin on Track to Rebound
Bitcoin had a strong run in the first half of this year after a solid 2023. Bitcoin hit a record high of $73,750 on March 14.
