Fed Rate Cut in December? Here’s How Bitcoin Price Will React

The crypto market is buzzing with anticipation as investors bet that the US Federal Reserve will cut interest rates by 0.25% in December. According to the CME FedWatch tool, the chances of this happening have jumped to 74.5%, up from 66% just a few days ago. What’s driving this growing confidence? If the Fed cuts rates, it would mark the third reduction this year, and it could have major implications for the economy—and for Bitcoin.

Keep reading to find out how a rate cut might impact your investments.

What Could a Fed Rate Cut Mean for Crypto?

A rate cut lowers the cost of borrowing for individuals and businesses. When interest rates are lower, loans become cheaper, which can encourage spending and investment. For the stock market and riskier assets like Bitcoin, rate cuts are generally seen as a positive development. Investors tend to feel more comfortable taking on risks when borrowing costs decrease, making them more likely to invest in assets with higher potential returns, like cryptocurrencies.

Currently, the Federal Reserve’s interest rate is between 4.5% and 4.75%, following two previous cuts this year. Another reduction would signal a more supportive economic environment, which could encourage investors to put their money into riskier assets like Bitcoin.

Experts Weigh In

Marko Papic, Chief Strategist at BCA Research, predicts the US Federal Reserve will cut interest rates in December. He also believes the US dollar may peak by mid-2025, driven by possible economic disappointments under Donald Trump.

At the same time, Federal Reserve officials are hinting at a rate cut. Governor Christopher Waller stated on December 2 that he leans toward supporting a cut, but the decision will depend on upcoming economic data, like inflation and job reports. New York Fed President John Williams has also mentioned that interest rates might be reduced gradually, though he hasn’t specified when this might happen.

Ultimately, the Fed’s decision will depend on the economic performance over the next few weeks.

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Could the Rate Cut Fuel Bitcoin?

Bitcoin has already seen impressive growth this year, more than doubling in value. Many analysts are optimistic that Bitcoin could break the $100,000 mark by the end of 2024. With a possible rate cut from the Fed, Bitcoin’s price could continue to rise, benefiting from the increased investor interest in riskier assets.

With Bitcoin on the rise, the stage is set for a thrilling end to 2024, with the Fed’s actions playing a central role.