According to Decrypt, the Federal Reserve announced a quarter-point interest rate cut on Thursday, a decision anticipated to bolster 'risk-on' assets such as Bitcoin. This move comes as Bitcoin has been experiencing a surge, reaching multiple all-time high price points following Donald Trump's recent election victory. The central bank's decision was unanimously supported by all 12 Fed voters. This follows a previous 50 basis point cut in September, marking the first reduction since the Fed's aggressive rate hikes in 2022 aimed at controlling inflation during the COVID-19 pandemic.
Cryptocurrencies, similar to tech stocks, have generally benefited from low interest rates due to their volatile price movements. However, the rate hikes in 2022 made such investments less appealing. With inflation now under control, the central bank is able to make borrowing cheaper once again. In a statement, the Fed noted that the risks to achieving its employment and inflation goals are balanced. Matt Mena, a crypto research strategist at ETF issuer 21Shares, commented that the latest rate cut could further boost cryptocurrencies. He stated, 'The Fed's 25 bps rate cut introduces an economic boost favorable to risk assets like Bitcoin.' He also highlighted that Trump's pro-crypto policies create a supportive macro environment for Bitcoin.
The recent election victory of Donald Trump has already been providing a boost to Bitcoin and other cryptocurrencies. Experts had noted this trend even before the Fed's announcement. Bitcoin, the world's largest cryptocurrency, has been rising in value following Trump's win, driven by his promises to support the industry. According to CoinGecko data, Bitcoin is currently priced at $76,154, marking an 8% increase over the past week. Earlier on Thursday, Bitcoin reached a new all-time high of $76,677.
