Sun Sep 15 03:00:01 UTC 2024: ## Fed Rate Cut Could Boost or Bust Bitcoin, Experts Say

The upcoming Federal Open Market Committee (FOMC) meeting is generating considerable buzz in the cryptocurrency market, with investors eagerly awaiting a potential interest rate cut. While the magnitude of the cut remains uncertain, many anticipate either a 25-basis point or a larger 50-basis point reduction.

According to Johns Hopkins University economist Steve Hanke, a 25-basis point cut, which many believe is likely, could actually trigger a “sell-the-news” event for cryptocurrencies. Hanke argues that this scenario has already been priced into the market, leading to a potential underwhelming response and potential sell-offs.

However, a more substantial 50-basis point cut, not yet fully reflected in market pricing, could potentially give the market a lift, Hanke believes.

The potential for a rate cut comes as inflation in the US begins to cool down. The current federal funds rate sits at 5.25%-5.50%, its highest level in 23 years. The Fed typically adjusts interest rates to stimulate economic growth and control inflation.

Traditionally, rate cuts could be beneficial for cryptocurrencies, as they might prompt risk-averse investors to seek higher returns in alternative assets like Bitcoin. However, predicting the exact market reaction remains challenging, as the potential impact of the rate cut may already be factored in.

Bitcoin currently trades around $60,000, up 3.5% in the past 24 hours, suggesting a potential positive response to the anticipated rate cut.

The FOMC meeting will likely be a defining moment for the short-term outlook of Bitcoin and other digital assets. Investors and traders are closely watching to see how the Fed’s decision will impact the cryptocurrency landscape.

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