While it remains unclear whether the US Federal Reserve will cut its benchmark interest rate by another 25 or 50 basis points next week, it is certain that the US central bank will begin its first monetary easing cycle since 2019.
The Fed will join other major Western central banks such as the European Central Bank (ECB), the Bank of England (BoE) and the Bank of Canada, all of which have cut interest rates, some more than once. While Japan has not joined the trend and has actually taken its first steps toward tightening policy, its benchmark interest rate of 0.25% is still only slightly above zero.
The reaction from traditional markets such as stocks, bonds and gold prices has been strong as the monetary easing campaign in developed countries has begun to take shape.
Despite a significant recovery on Friday, Bitcoin (BTC) remains below $60,000 and about 20% below All-Time-High above $73,500 reached six months ago.
Despite a sharp decline since March, Bitcoin is still up more than 40% year-to-date and up 127% from last year, according to a smart observer CoinDesk spoke to. Much of Bitcoin’s underperformance over the past few months may just be a respite from a strong rally. Bitcoin’s performance in 2024 and year-to-date still outpaces U.S. stocks and gold.
Looking further, however, can be disappointing for Bitcoin investors. Bitcoin is now well below its All-Time-High of nearly $69,000 three years ago. When you factor in rapid inflation over the past three years, Bitcoin’s performance is even worse, especially if Bitcoin investors want to XEM it as an inflation hedge. The S&P 500 has gained about 33% over that time, and gold — the so-called “old fashioned” — has gained more than 50%.
Steno’s research says Bitcoin hasn’t experienced many rate-cut cycles — in fact, only the one that started in 2019. The team says Bitcoin actually fell about 15% between the Fed’s first rate cut in August and the end of November, when the Fed cut rates by 75 basis points. It wasn’t until the massive Covid stimulus in March 2020 that Bitcoin bottomed Dip and began a strong rally.
It is possible that a chain of short-term and normal interest rate cuts will not have much of an impact on Bitcoin prices, and only emergency measures by central banks could trigger a new bull run.
The article Bitcoin Left Behind as Stocks, Bonds and Gold Soar in Global Monetary Easing appeared first on Coin79 - Coin News Update and Crypto Investment Knowledge .
