Bitcoin's Prospects After Fed's 0.25% Rate Cut: Analyzing Trends and Future Predictions

In a move that could indicate a positive turn for Bitcoin (BTC) and the wider cryptocurrency market, the Federal Reserve (Fed) has announced a 25 basis points (bps) interest rate cut, setting the new rate range at 3.5% to 3.75%.

Key Takeaways

The Fed's recent 25 bps rate cut could potentially boost Bitcoin and the overall crypto market.
Economic adviser Kevin Hassett believes more rate cuts are possible, which may support bullish momentum for BTC.
Historically, Bitcoin tends to decline by 5% to 10% following Fed rate cuts; however, current market dynamics may differ from past occurrences.

Bitcoin

Will Bitcoin Surge Towards $100,000?

Kevin Hassett, an economic adviser at the White House and a frontrunner for the next Fed chair position, shared his insight with the Wall Street Journal CEO Council, indicating there is “plenty of room” for further interest rate cuts. He highlighted, “If the data supports it, we could proceed—right now, I see ample opportunity to do that.” Hassett, who is favored by former President Donald Trump for the Fed chair role after Jerome Powell's term, has critiqued Powell for being “too late” with rate reductions.

While the last interest rate cut in October had little effect on Bitcoin's price, analyst Michael van de Poppe believes that this latest cut could greatly benefit cryptocurrencies. He termed this move a “great opportunity” for Bitcoin and pointed out that a breakout above $92,000 could signal future bullish momentum. Van de Poppe is optimistic about Bitcoin maintaining its support level within the range of $91,500 to $92,000, suggesting that if it does, Bitcoin could potentially reach the $100,000 milestone.

Can Bitcoin Dodge a Historical 10% Decline?

Market expert Ash Crypto pointed out that in each of the last four instances when the Fed reduced rates by 25 bps, Bitcoin faced a decline of 5% to 10% shortly thereafter. However, he mentioned that the current market setup is different from past patterns, hinting that unique factors could be influencing the situation.

Among the positive elements contributing to this optimism is the end of quantitative tightening (QT) after three years. If Powell indicates the possibility of quantitative easing (QE) in his upcoming comments, it could trigger an additional bullish trend in the market. Moreover, being the third rate cut, Ash argues that there is a chance for increased liquidity to return to the markets, benefiting risk assets like Bitcoin historically.

Bitcoin The daily chart reflects BTC's price consolidation despite the Fed announcement. Source: BTCUSDT on TradingView.com
Featured image from DALL-E, chart from TradingView.com