Bitcoin Price Hits $62,000 Amid Interest Rate Cuts – Best Cryptos to Buy Now
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The U.S. Federal Reserve (Fed) has acted aggressively, cutting its benchmark interest rate by 50 basis points amid signs of lowering inflation.
Bitcoin reacted positively to the news, with a 3% rally in the past 24 hours.
Bitcoin Rises As Traders Bet On Strong EconomyIt’s the first time the Fed has lowered its interest rates since the Covid pandemic.
Analysts were split on whether the Fed would opt for a more conservative 25 basis point cut or a 50-point cut. The latter may better stimulate the economy at the risk of causing concern about a potential recession.
However, Bitcoin’s positive price action shows that traders are optimistic.
Currently, BTC is trading at $62.1K.
X commentator The Kobeissi Letter underscores that opening 50-point rate cuts have historically preceded bearish market performances.
However, the commentator also underscores that the Fed “say the economy is strong and they are calling for a soft landing.”
Here are the S&P 500's returns of rate cut cycles depending on if a recession hit or not.
History says starting with a 25 bps cut results in an average S&P 500 return of +10% in 3 months in +15% in 12 months.
This compares to -15% in 12 months when starting with a 50 bps cut. pic.twitter.com/JnJinNMmUb
Currently, the main concern is the U.S. weakening labor data, which some market participants fear could be an early sign of a looming recession.
However, Fed Chair Jerome Powell addressed this in the FOMC review following the rate cut decision.
“We will do everything we can to support a strong labor market as we make further progress toward price stability. With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2 percent inflation while maintaining a strong labor market,” he said.
As analyst Kaduna highlighted, “Rate cuts are bullish if recession can be avoided. If a recession can be delayed to late 2025, that would perfectly align with the BTC 4-year cycle.”
He also notes that there is just an 8% chance of a recession in 2024, indicating the market is in a favorable position for gains.
Rate cuts are bullish if no recession.
Chance of recession in 2024 is only 8%.
Q4 up only 