Crypto Market Bullish Following Fed’s Interest Rate Cut
The Federal Reserve cut interest rates by 25 basis points to 4.5% on November 7. Despite this change, both the crypto and equities markets remained stable. Bitcoin increased by 1% to $76,644.57, Ethereum surged by 7.4% to $2,888.21, while Solana approached $200 with a 4.6% rise. The overall crypto market cap is nearing $2.7 trillion, notably boosted by RWA tokens. Fed Chairman Jerome Powell acknowledged ongoing economic uncertainties amid low unemployment and easing inflation.
On November 7, the Federal Open Market Committee (FOMC) decided to lower the US interest rate by 25 basis points, bringing it down from 4.75% to 4.5%. This development did not significantly impact the cryptocurrency and equities markets, as investors seem to have anticipated this adjustment. Data from CryptoSlate indicates that Bitcoin (BTC) experienced a 1% increase over the last 24 hours, now priced at $76,644.57, while Ethereum (ETH) surged 7.4% to reach $2,888.21. Furthermore, Solana (SOL) grew 4.6%, approaching $200. The overall crypto market cap increased by 1.3% and is nearing $2.7 trillion. Particularly notable was the growth of tokens associated with real-world asset (RWA) protocols, which rose by 11%, significantly outpacing the average market performance of 2.3%. Meanwhile, the US equity markets remained stable following the FOMC announcement, with the S&P 500 experiencing a rise of 0.9% and the Nasdaq index up 1.62%. These index gains occurred even prior to the decision on interest rates. Fed Chairman Jerome Powell acknowledged that while economic activity is expanding, uncertainty still prevails. He noted a slight ease in the labor market, which has led to a mild increase in the unemployment rate, although it remains low overall. Powell further indicated that inflation is moving towards the Fed’s 2% target, yet it continues to be elevated. He stated, “Future rate decisions will depend on incoming data, economic outlook, and the balance of risks to employment and inflation. Nevertheless, ‘one or two’ months of displaying unfavorable data will not affect the Fed’s rate decisions.” Addressing political changes, Powell emphasized that any electoral outcomes would not influence rate policy in the immediate future.
The FOMC plays a crucial role in shaping monetary policy in the United States, influencing both the crypto and equity markets through its decisions on interest rates. The recent rate cut signals an accommodative monetary policy stance, intended to stimulate economic growth amid uncertainties, including potential inflation control. Changes in interest rates affect investor sentiment across various asset classes, including cryptocurrencies, which appear to have absorbed the news positively. This environment has led to notable price increases among major cryptocurrencies post-announcement, highlighting the interconnectedness of financial markets.
In conclusion, the recent interest rate cut by the Federal Reserve appears to have fostered a bullish sentiment in the cryptocurrency market, as reflected in the price increases of Bitcoin, Ethereum, and Solana. The stability witnessed in the equity markets further underscores the anticipated nature of the rate cut. However, Fed Chairman Jerome Powell’s comments regarding the ongoing economic uncertainties and inflation suggest that future monetary policies will continue to be data-driven and closely monitored, with no immediate effect from upcoming electoral changes.
Original Source: cryptoslate.com
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