The Federal Reserve just announced its first interest rate cut in a while, cutting the ceiling to 5% from 5.50% on September 18. The decision came after an 11-1 vote by the Federal Open Market Committee (FOMC), with U.S. stock indexes rising in the short term. The Dow Jones Industrial Average rose 0.79%, the S&P 500 rose 0.86%, and the Nasdaq Composite rose 0.98%.
Interestingly, the Federal Reserve's dot plot also suggests more rate cuts are likely, with some officials calling for as many as 75 basis points of cuts by 2024.
But how does this affect the cryptocurrency market?
For many cryptocurrency investors, this rate cut was highly anticipated. There is a strong belief that lower interest rates create the perfect conditions for a cryptocurrency rally. Traditionally, rate cuts have pushed investors toward riskier assets like cryptocurrencies, as low-interest rates tend to weaken the dollar and make traditional investments less attractive. Investors recall that similar moves by the Fed in the past have triggered major rallies in Bitcoin and altcoins.
The announcement sparked excitement in the market, as people felt this could be the spark needed to ignite a new bull run. Gold prices spiked nearly $20 after the rate cut, and the US Dollar Index (DXY) dropped 40 points, which also signaled potential capital inflows into cryptocurrencies. If history repeats itself, many believe the long-awaited bull run could be just around the corner.
With the Fed forecasting further rate cuts through 2024 and inflation risks seemingly balanced, crypto enthusiasts are eagerly watching Bitcoin, Ethereum, and other major tokens for attention in the coming months. Many believe that under the right conditions, the crypto market could see exponential growth, similar to previous rate-cut cycles that have led to significant gains in the space.
