Cryptocurrency markets are bracing for the Federal Reserve's decision on Wednesday whether to cut interest rates by 25 or 50 basis points.
What Happened: Jim Bianco of Bianco Research in an interview with Natalie Brunell emphasized the importance of understanding where the "neutral" funds rate is — the rate that neither stimulates nor restricts the economy. He believes the neutral rate is around 3.5% to 4%, while the Fed thinks it's under 3%.
Bianco expressed concern that if the Fed cuts rates too aggressively, such as a 50 basis point cut, they might overshoot and potentially stimulate another round of inflation in 2025. Polymarket data shows a 53% probability of a 50 basis points decrease and a 44% chance of a 25 basis points cut.
He noted that the stock market and economic data don't seem to be significantly bothered by the current interest rate levels, questioning the urgency for rate cuts.
Bianco highlighted the broader context of post-pandemic economic changes, including inflation, government spending, and population growth, which complicate the interest rate decision.
Also Read: '91% Chance Local Top Is In,' Says Trader Ahead Of Pivotal Rate Cut Decision
Why It Matters: Despite the hype surrounding Bitcoin (CRYPTO: BTC) ETFs, Bianco argues they haven't lived up to expectations.
He notes that while $17 billion has flowed into these funds since their launch, much of this isn't new money entering the crypto space.
Instead, it's largely existing Bitcoin holders moving their assets from on-chain wallets to traditional brokerage accounts.
"Quit waiting for price and make it a better system," Bianco concludes, "and then the ETF flows will follow."
Bitcoin is up 5.7% on Tuesday, cracking the $61,000 mark.
Ethereum (CRYPTO: ETH) and Dogecoin (CRYPTO: DOGE) are also trading higher, pushing the global crypto market cap up by around 4%.
What's Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga's upcoming Future of Digital Assets event on Nov. 19.
- 'What Changed?' — Federal Reserve May Take A Bigger 50 Basis Points Rate Cut Bite Next Week, Market Odds Imply
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