The Federal Reserve's rate cut shakes markets: Bitcoin price flat at $60,189.00 while stocks struggle
In a surprising move, the Federal Reserve has made its first rate cut since the Covid pandemic, reducing borrowing rates by a half percentage point, or 50 basis points. This aggressive cut, lowering the federal funds rate to a range of 4.75% to 5%, signals deepening concerns over the state of the U.S. economy and has sparked volatility across multiple markets, including cryptocurrencies.
At 16:40 ET (20:40 GMT), Bitcoin price remained flat at $60,189.00, while Ethereum was down 1.1% at $2,138.87 and XRP dropped about 1.9%. Cryptocurrency-related stocks also gave up their earlier gains, with most bitcoin miners and crypto exchange Coinbase Global Inc ending flat to slightly negative.
The rate cut, announced after the Fed's two-day meeting, comes after a year of aggressive tightening to combat inflation. Ten out of 19 Fed officials supported at least another half-point rate cut during the last two meetings of 2024. Historically, rate cuts have weakened the U.S. dollar and benefited risk assets like stocks.
Bitcoin, in particular, has struggled to hold onto the gains it made earlier this year, trading around the $60,000 handle after reaching highs of $65,000 in August. This latest rate cut could further impact the cryptocurrency market and its associated stocks.
In conclusion, investors should pay close attention to the Federal Reserve's decisions and their impact on the financial markets. Rate cuts can have significant effects on asset prices and market volatility, so it's important to stay informed and make informed investment decisions based on the latest economic developments.