Bitcoin (BTC) reacted to the Federal Open Market Committee (FOMC) meeting on Wednesday, which decided to cut interest rates by 50 basis points (0.50 percentage points) in September.
The decision signals the start of a easing cycle, with more rate cuts expected in 2024.
FOMC, Rate Cuts, Bitcoin Breaks $60K
The Federal Reserve cut interest rates by 50 basis points, the first rate cut since early 2020. The move was expected by financial markets and cryptocurrency investors as policymakers aimed to control inflation and promote job growth.
Several indicators came out before the rate cut. First, prices. The US consumer price index (CPI) fell from 2.9% in July to 2.5% in August. This shows that inflation is slowing. After the rate decision that day, the Fed explained that the weakening job market and the easing of inflation have led the Fed to lower borrowing costs, which is intended to stabilize the economy.
“I think the rate cut will happen sooner than we expect because the labor market and the economy are deteriorating at an accelerating rate,” analyst Michael van de Poppe shared .
Read more: How to Protect Yourself Against Inflation Using Cryptocurrencies
Despite the rate cut, the Federal Reserve remains cautious about inflation risks and stands ready to adjust policy as needed to maintain market stability. This decision directly affects the broader economy, as it affects households and businesses across the United States.
Higher interest rates make borrowing more expensive, but lower interest rates make it easier to access loans, encouraging spending and investment. This increased liquidity can benefit riskier assets like Bitcoin and stocks, which often benefit when borrowing costs fall.
Historically, interest rate cuts have supported assets like Bitcoin. For example, Bitcoin surged after the Fed’s March 2020 rate cut as investors sought to take advantage of lower borrowing costs amid economic uncertainty.
Read more: How to Buy Bitcoin (BTC) and All You Need to Know
According to BeInCrypto data, Bitcoin is currently trading at $67,300.
