Bitcoin News: The Federal Reserve has reduced interest rates for the first time since the early days of the COVID-19 pandemic, sending ripples through the cryptocurrency market. Bitcoin, the leading cryptocurrency, saw an uptick of about 3 percent in its value following the announcement on September 19, 2024.
Bitcoin price record
As of 9.08 am on September 19, Bitcoin was trading in the green, up 2.63 percent at USD 62,120.22, per Coinmarketcap.com. This movement aligns with typical investor behaviour, where lower interest rates push demand for higher-risk assets. Despite this recent boost, Bitcoin has remained relatively stable since reaching its all-time high of nearly USD 74,000 in March.
Federal Reserve’s Rate cut
The Federal Reserve, on Wednesday, September 18, announced a 0.5 percentage point reduction in its benchmark interest rate, marking the US central bank‘s first rate cut in over four years. The decision comes just months before the November presidential election.
The move is expected to have far-reaching effects on the economy, as it influences the rates at which banks extend loans to both individuals and businesses. The decision is expected to affect borrowing costs for consumers, including home mortgages and credit card debt.
This rate cut also signals a shift from the Fed’s recent strategy of maintaining elevated interest rates to curb inflation. The central bank has been nearing its long-term inflation goal of 2 percent.
Market reactions to Bitcoin price
Karim Dandashy, an over-the-counter trader at Flowdesk US, commented, “Knee jerk reaction higher as the market gets some relief after weeks of flip-flopping between 25 and 50 bps,” as quoted by Bloomberg.
Spencer Hallarn, global head of over-the-counter trading at crypto investment firm GSR, said, “It could signal in theory that the Fed is cutting 50 because they are worried about something. If they think we are on the brink of recession, then maybe feel more urgent to cut quickly,” as quoted by Bloomberg.
The cryptocurrency community remains optimistic about Bitcoin’s future. Hedge fund manager Anthony Scaramucci said earlier on Wednesday that the rate cut, combined with increasing regulatory clarity in the US crypto industry, could propel Bitcoin to new record highs, Bloomberg reported.
