The U.S. Federal Reserve has decided to cut the benchmark interest rate by 25 basis points, which is in line with analysts' expectations.
The price of Bitcoin is currently trading at $103,729 on the Bitstamp exchange following the announcement, slipping by more than 1%.
As reported by U.Today, the Fed started cutting interest rates in September. The price of Bitcoin has rallied by more than 70% since then.
Alex DovbnyaThe rate has now been lowered to the 4.25%-4.50% range following the most recent cut.
However, some analysts now expect the Fed to adopt a more hawkish tone in 2025 due to concerns about stickier-than-expected inflation.
BNP Paribas, for instance, predicted that the Fed will not implement another rate cut until mid-2026. This likely will not bode well for risk-on assets of the likes of Bitcoin.
During his upcoming press conference, Fed Chair Jerome Powell is likely to provide markets with crucial hints about whether or not the Fed is inclined to scale back easing.
The Fed's policy statement shows that the central bank is unsure whether it should continue cutting rates.
Fed swaps are now pricing in less easing in 2024 following the Fed's revised dot plot.
The median "dot" has now moved 0.50% higher to 3.875%. "I don't think markets will like that much," Jeroen Blokland, founder and manager of the Blokland Smart Multi-Asset Fund, said on social media.
The central bank is now widely expected to keep rates unchanged in January. US rate futures are now pricing in just two rate cuts in 2025.
Valeria Blokhina
Dan Burgin
Vladislav Sopov