The Fed cuts interest rates. Why did cryptocurrencies fall today?
The Fed is going to cut interest rates again. What will happen to Bitcoin and other cryptocurrencies?
On December 18, Jerome Powell, head of the Federal Reserve, will announce new policies at 12:30 a.m. (India time). Everyone originally thought that the Fed would cut interest rates by 0.25%, bringing interest rates to between 4.25% and 4.5%, but now some people are worried that the Fed will become tough and may not be so loose in 2025.
Since September, the Fed has cut interest rates by a total of 1 percentage point, trying to give the economy a boost while it is still inflated.
Before cutting interest rates, we have to look at a few key points:
According to a tool in Chicago, there is a 95.4% chance of a rate cut today, and a 4.6% chance of no change. Although it is a little less than yesterday (98%), there is still a high probability of a rate cut.
However, the price increase is still higher than the 2% the Fed thought, and it rose by 2.7% in November, so monetary policy must be cautious.
What about Bitcoin and cryptocurrencies?
The Fed is about to take action, and the cryptocurrency market will also be shaken. Bitcoin fell 2.43% from yesterday to today, with a total value of about 2.05 trillion.
Bitcoin fell from Tuesday's high of $108,250 to $103,737, and other currencies such as Ripple, Solana, Dogecoin, and Binance Coin also lost some money.
Ethereum was even worse, falling 4.10%, with a total value of nearly 461.87 billion. The total value of the entire cryptocurrency market is now 3.36 trillion, a drop of 2.58% in one day. This is all because everyone is worried about the Fed's decision and how money and interest rates will change.
How will investors view cryptocurrencies in the future?
Now everyone is watching the Fed, and the reaction of the cryptocurrency market can show how much impact monetary policy has on digital currencies.
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