Bitcoin jumped over 2% after the US Federal Reserve cut interest rates. This was the Fed’s first rate cut since 2020. The move affected the crypto market, changing investors’ behaviour.
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How Fed Rate Cuts and Crypto Investments Drive Bitcoin’s Price Surge
Fed’s Surprising Move
On September 18, 2024, the Federal Reserve lowered its main interest rate by 0.5%. This big change in money policy comes just before the November election.
Bitcoin’s Quick Response
After the news, Bitcoin’s price went up 2.63% to $62,120.22. This fits with how investors often act. When interest rates go down, they often want riskier investments.
Karim Dandashy, who trades at Flowdesk US, said, “Knee jerk reaction higher as the market gets some relief after weeks of flip-flopping between 25 and 50 bps.”
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What It Means for the Future
We don’t know yet how the Fed’s choice will affect Bitcoin and other cryptos in the long run. Spencer Hallarn from GSR, a crypto investment firm, thinks, “It could signal in theory that the Fed is cutting 50 because they are worried about something. If they think we are on the brink of recession, then maybe feel more urgent to cut quickly.”
Is Bitcoin Safe in Tough Times?
Some investors think Bitcoin could protect them if the U.S. has money troubles. BlackRock, a big investment company, says many clients see Bitcoin as a safety net.
Can Bitcoin Earn Interest?
People disagree about whether BTC can earn interest like a savings account. Michael Saylor from MicroStrategy thinks banks could offer this if they’re careful.
But Saifedean Ammous, who wrote “The Bitcoin Standard,” doesn’t agree. He says, “Ultimately I don’t think this model works without a lender of last resort. I think people are just going to learn the hard way to not do this.”
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The crypto market keeps changing as big economic factors shift. Investors should stay informed and think about different views when deciding what to do with their money.