Bitcoin has shown a timid rebound after the Federal Reserve’s decision to cut interest rates by 0.5 basis points, bringing the range down to 4.75%-5%. This move, while anticipated by investors, has sparked a mix of optimism and caution in the markets, particularly within the cryptocurrency sector.
Market Reactions
The Federal Reserve’s decision was not a surprise, as speculation about the magnitude of the cut had been circulating for weeks. Following the announcement, U.S. stock markets initially reacted positively but closed slightly down, while European markets celebrated the news with gains between 0.8% and 1.3%.
After trading around $60,000, Bitcoin began to fluctuate as Fed Chair Jerome Powell explained the rationale behind the rate cut. However, optimism grew, and Bitcoin’s price surged to over $62,000, reflecting a 2.5% increase in just 24 hours. Ethereum, the second-largest cryptocurrency, followed suit with a 4.2% rise to $2,400.
The drop in interest rates is expected to stimulate long-term investments. Jorge Soriano from Criptán noted that lower rates encourage riskier investments, which is beneficial for Bitcoin. Javier García de la Torre, director of Binance Spain and Portugal, added that lower rates could also heighten inflation fears, prompting investors to turn to cryptocurrencies as a hedge against inflation and a means to preserve purchasing power.
