In brief
- Analysts were upbeat that the Fed would cut interest rates again and help bolster risk assets.
- In his post decision comments, Jerome Powell noted the bank’s concerns about a sagging job market and continued inflationary pressure.
- Bitcoin was trading at about $116,200, down slightly over the past 24 hours.
Neither the U.S. central bank’s decision to drop the interest rate nor Federal Reserve Chair Jerome Powell’s measured comments following the announcement stirred Bitcoin much on Wednesday.
But analysts whom Decrypt spoke to are largely upbeat that the asset’s price would gain ground throughout the remainder of the year.
Powell’s emphasis on a sagging employment market and wider concerns will likely result in additional rate cuts, sending Bitcoin and other cryptocurrencies higher, they said. They also noted other factors, including the growth of crypto treasuries, as a boon.
“Powell framed today’s move as a ‘risk-management cut’ and noted there was no big push for a 50 bps move, even as the statement flagged slowing job gains and still-elevated inflation,” Ira Auerbach, former head of digital assets at Nasdaq and current head of tandem at Offchain Labs, told Decrypt. “The FOMC’s statement and projections sketch a data-dependent path to more cuts in the near future. Easier financial conditions ahead should be supportive of the crypto ecosystem.”
Earlier Wednesday, the Fed lowered the federal funds rate that it sets for overnight lending between commercial banks to a range between 4.25% and 4.50%.
This year’s first cut came after leaving rates unchanged throughout five monetary policy meetings and after months of intense pressure from U.S. President Donald Trump, who has been sensitive to being saddled with a sagging economy.
But declining employment numbers, including a more than 900,000 downward adjustment in the number of jobs created over a year-long period ending this March, swayed the bank to act.
“Risks to inflation are tilted to the upside and risks to employment to the downside, a challenging situation when…our framework calls for us to balance both sides of our dual mandate, with downside risk to employment having increased, the balance of risks has shifted accordingly,” Powell told reporters, even as he noted that “higher tariffs have begun to push up prices in some categories of goods.”
Six hours following the announcement, Bitcoin was trading near $117,000, roughly flat over the past 24 hours, according to crypto data provider CoinGecko, as investors had accounted for the rate cut. Prices have since cooled slightly to $116,600.
Stocks and other risk-on assets were similarly unimpressed with the tech-heavy Nasdaq and S&P 500 both dipping. Crypto and equity markets had rallied in the days leading up to the announcement, with Bitcoin climbing 2% over the past week.
In a text to Decrypt, Gerry O’Shea, head of global market research at crypto asset manager Hashdex, noted Bitcoin’s “muted” response to the announcement, but wrote that “other factors…could help drive Bitcoin higher in the coming weeks, including continued demand from corporate treasuries and ETFs.”
“These factors, along with more confidence from the market that additional cuts are likely, may help drive Bitcoin to a new all-time high in the coming weeks,” he wrote.
The interest rate could fall to 3.6% by year’s end, according to the median projection of bankers at the meeting, Powell noted, a level requiring one large cut at one of the last two meetings this year or separate smaller cuts.
Additional median projections showed declines to 3.4% by the end of 2026 and 3.1% at the conclusion of 2027.
“As is always the case, these individual forecasts are subject to uncertainty,” Powell said. “Policy is not on a preset course.”
“Wall Street and Main Street alike are about to enter a fiat devaluation cycle the likes of which hasn’t been seen since 2021,” Stephane Ouellette, CEO of crypto-focused investment bank FRNT Financial, told Decrypt.
“Bitcoin is a clear alternative to this devaluation,” he wrote.“It may not happen all at once, but we believe as interest rate cuts continue, investors will, over time, allocate more to Bitcoin to protect their purchasing power.”
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Source: https://decrypt.co/340090/bitcoin-headed-next-following-fed-chair-powells-remarks
