Decline in Bitcoin following Federal Reserve's interest rate reduction and hint at further, slow relaxation
Federal Reserve Cuts Interest Rates and Signals More to Come, Causing Crypto Markets to Tumble
The Federal Reserve has announced a much-anticipated interest rate cut of 25 basis points, bringing the policy rate down to 4.00%-4.25%. This decision, which was as expected, was accompanied by an updated outlook that extends to 2025.
In a move that could signal more rate cuts to come, the Federal Reserve now expects two more quarter-point cuts this year, up from one in the June Summary of Economic Projections. This shift in monetary policy is aimed at addressing the recent softening of the labor market and the perking up of inflation in recent months.
The announcement sent shockwaves through the crypto market, with Bitcoin, the largest digital currency by market cap, falling to as low as $114.8K minutes after the Federal Open Market Committee's rate decision. Bitcoin's price decreased by 1.1% in the last 24 hours, currently at $115.6K. Other cryptocurrencies also felt the impact, with Ethereum (ETH-USD) decreasing by 0.3% to $4.49K, ChainLink (LINK-USD) decreasing by 1.2%, Aave (AAVE-USD) decreasing by 1.4%, Tronix (TRX-USD) decreasing by 0.7%, and Monero (XMR-USD) decreasing by 8.4% in the same period. Shiba Inu (SHIB-USD) also saw a decrease of 0.9% in the last 24 hours.
Despite the lack of specific information regarding the names of the fund managers at BofA's Global FMS who are not structurally invested in stock market, it is clear that the Fed's rate decision caused Bitcoin to briefly extend its Wednesday losses.
As the Fed continues to navigate the economic landscape, the impact on financial markets, including the crypto market, will undoubtedly remain a point of interest for investors and analysts alike.
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