Recently, Federal Reserve Chairman Jerome Powell hinted at a rate cut in September. As a result, there may be significant volatility in the cryptocurrency industry next month. Currently, the price of Bitcoin is $63,051.88. It has fallen by about 6.6% in the past 30 days. Will the proposed economic actions affect the price of BTC?
Major news of the rate cut announced by Federal Reserve Chairman.
When Powell made his speech at the Jackson Hole Economic Symposium, he made sensational comments about the possibility of a rate cut. Analyzing his remarks, we can see that the US government no longer sees inflation as a threat, and the biggest risk for them is employment.
Overview of the US economy in August 2024.
The current US Federal Fund Rate is 5.5%. At the end of 2019, the rate was about 1.75%. In March 2020, the rate dropped to 0.25%. The rate remained at that level until the end of February 2022. Afterwards, the rate slowly and steadily climbed. By the end of December 2022, the rate reached a high of 4.5%. In July 2023, the rate peaked at 5.5%. Since then, the rate has remained at that level without any fluctuations.
The current civilian unemployment rate in the US is 4.3%. Although it reached as high as 14.8% in April 2020, it had dropped to 3.4% by April 2023. This year, the unemployment rate has been steadily rising. In January 2024, it approached 3.7% at the beginning of the year. In May, it surpassed 4.0%. Last month, the unemployment rate was 4.1%.
The US government seems to be concerned about the current bleak trend in the US job market.
The impact of the Federal Reserve rate cut.
Interest rate cuts usually promote economic growth, as they can reduce borrowing costs. The proposed rate cut in the USA will inject more funds into the economy. This will encourage consumer spending and investment.
What can Bitcoin enthusiasts expect?
Rate cuts naturally make bonds less attractive. This means that funds currently held in bonds may shift towards the cryptocurrency market. There are several past examples supporting the theory that Fed rate cuts have a positive impact on BTC prices.
Let's see what happened in the BTC market in March 2020.
Despite the most severe global pandemic, the Bitcoin market has continued to rise even in this uncertainty, and has essentially been unaffected by the global economic slowdown.
End
In conclusion, we can expect some significant developments in the cryptocurrency market, especially in the coming months for the Bitcoin market. Perhaps, this will mark the beginning of the next BTC bull market? Do you agree?