The Federal Reserve cut interest rates for the first time since March 2020, a move aimed at combating inflation and economic uncertainty.
what happened: The rate cut was widely expected and was seen as having an 85% chance of happening before the announcement. This expectation led to a bullish reaction in both the cryptocurrency and traditional stock markets. However, prices quickly reversed course as traders executed their buy orders.
Santiment says this pattern is common: Ethereum ETH/USD Merged Bitcoin BTC/USD Halving. Traders often get excited expecting prices to skyrocket, only to be surprised when prices eventually fall back down.
Despite the initial bullish reaction, the market reaction may not be so simple. Traders are advised to closely monitor sentiment and funding rates. Positive sentiment may indicate greed, while negative sentiment may suggest a buying opportunity.
Two more rate cuts are expected by the end of 2024, with a potential 100 basis points decline in interest rates through 2025, according to the report.
See also: Elizabeth Warren urges Fed to cut interest rates by 0.75%; veteran investor warns that even a 0.5% cut “would make Trump less likely to win”
Why is this important?The Federal Reserve's decision to cut interest rates by 50 basis points to a range of 4.75% to 5% marks a major shift in monetary policy.
Jerome PowellChairman Powell defended the measures as necessary to support the labor market and prevent a negative economic impact. He stressed the importance of acting preemptively to protect the economy and underscored the Fed's cautious, data-driven approach.
Lower interest rates have a broad impact on consumers, potentially affecting mortgage rates, credit card rates, and auto loan rates. This trickle-down effect can affect consumer spending and borrowing behavior.
Despite the initial market enthusiasm, Chairman Powell's cautious remarks on the future path of interest rates have created uncertainty in the market. The Fed's dot plot indicates that further easing is expected in the future, with additional rate cuts likely in the coming years.
Price ActionBitcoin is currently trading at $61,950.10 and is up 0.32% over the past 24 hours, and is up 40.14% year-to-date. Meanwhile, Ether is currently trading at $2,357.76 and is up 0.92% over the past 24 hours, and is up 0.19% year-to-date, according to data from Benzinga Pro.
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This story was written and edited with Benzinga Neuro. Kaustubh Bagalkote
Market news and data provided by Benzinga API
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