Key Points
- Bitcoin’s price surged above $62,000 following yesterday’s FOMC meeting.
- The US Fed decided to cut interest rates by 50 bps, the first rate cut since 2020.
Bitcoin’s price rallied and surpassed the $62,000 level as the US Fed decided to cut interest rates by 50 bps on September 18.
At the moment of writing this article, BTC is trading above $62,000, up by 3% in the past 24 hours.
Yesterday, BTC’s price surged from around the $59,000 level, topping $61,000, before dipping again. Earlier today, BTC reached a price of over $62,500.
US Fed’s Rate Cut Decision Triggered a BTC Rally
As Greeks.live noted in a post via X, the Fed’s rate cut decision exceeded the expectations of many macro analysts, but was largely in line with futures market expectations, triggering a rally for BTC and the crypto market. At the same time, US stocks underperformed.
They also noted that regarding options, implied volatility declined significantly across all major maturities, with ultra-short-term IVs falling by more than 25%. Short-term short-selling expectations by large investors fell short.
According to official notes, the US Fed will have two more meetings this year, on November 8 and on December 19, and the market expects a cumulative 100 bps rate cut.
The next meeting will be close to the 2024 elections in the US set to take place on November 5, and the market volatility is expected to be high.
Bitcoin‘s price also showed increased volatility these days ahead of the FOMC meeting. Lookonchain recently shared a post highlighting BTC’s price trajectory in relation to the Federal Reserve rate.
Impact of Fed’s Rate Cuts/Hikes on BTC’s Price
Today, in a new post via X, Lookonchain analyzed how the US Fed’s decision to cut interest rates by 50 bps could affect the price of Bitcoin.
They shared a graph showing the impact of the Federal Reserve’s interest rate cuts and hikes on the price of Bitcoin over the past 10 years.
According to their graph, the highest impact on Bitcoin’s price was in 2020 when the Covid pandemic debuted and the Fed’s cut rates again, prompting a strong Bitcoin rally between 2020 and 2022.
It remains to be seen whether this round of rate cuts will trigger another BTC rally in Q4 2024.
Fed’s 1st Easing Campaign in 4 Years
As CNBC also noted, the Fed’s rate cut of 50 bps is the first one since the early days of the Covid pandemic, slicing half a percentage point off benchmark rates in an effort to head off a slowdown in the labor market.
Apart from the emergency rate reductions during the pandemic, the last time the FOMC decided to cut by half a point was back in 2008 during the global financial crisis.
The Fed’s decision lowers the federal funds rate to a range between 4.75% and 5%. The FOMC indicated more rate cuts of 50 bps by the end of 2024.
The post-meeting statement said that the Committee has gained greater confidence that inflation is moving towards the 2% target.
As CNBC highlighted, trading was volatile after the Fed’s decision with the Dow Jones Industrial Average jumping as much as 375 points, before easing.
The Bank of England, European Central Bank, and Canada’s Central Bank have all cut rates recently.
