On September 18, 2024, the Federal Reserve (Fed) announced a 50 basis point interest rate cut to a range of 4.75% to 5.00%. This is the first rate cut after several years of rate hikes aimed at controlling inflation.
For the cryptocurrency market, interest rate cuts are often a positive. Historically, lower rates facilitate access to cheaper capital, which encourages investment in riskier assets such as cryptocurrencies. For example, in 2020, during a period of rate cuts, Bitcoin and other digital assets saw significant price increases due to increased liquidity in the market.
This recent cut could lead to an increase in demand for cryptocurrencies, which could lead to price appreciation in Bitcoin, Ethereum, and other altcoins. However, in addition to interest rates, factors such as inflation and regulation will also influence the behavior of the crypto market.