The Federal Reserve's upcoming interest rate decision has everyone speculating. Some are debating whether the cut will be 25 or 50 basis points, while a few are floating more dramatic numbers like 75 or even 100 basis points. But let's be clear, such drastic cuts seem highly unlikely. A cut as high as 75 basis points would severely undermine the economy, and it's improbable that policymakers would take that risk. More realistically, the decision will likely lean toward a modest 25 basis point reduction or no change at all.
When it comes to the crypto market, larger rate cuts tend to push Bitcoin lower. Many investors mistakenly believe that as interest rates drop, people will move their money from savings into riskier assets like Bitcoin, triggering a bull market. While this reasoning isnât entirely flawed, it overlooks one key factor: the stock market. Historically, when interest rates are cut, the stock market reacts negatively, often triggering a ripple effect that drags down the cryptocurrency market as well.
The truth is, a rate cut signals deeper economic problemsâpossibly even a recession. The U.S. economy has already shown signs of weakness this year, despite inflated market numbers. Investors are aware of this underlying fragility, and any sudden moves could spark widespread panic selling across both stock and crypto markets. As for Bitcoin, even if a modest cut of 25 basis points is announced, donât expect a price explosion. Itâs more likely that weâll see a dip, but not a drastic crash to 40,000 levels.
With all the uncertainty in the air, itâs best to wait. Whether rates are cut or held steady, patience is key in navigating this volatile period. A shorting opportunity may present itself soon, but rushing in prematurely could be risky.
