Fed Cuts Rates and Bitcoin Bounces Back

Fed Cuts Rates and Bitcoin Bounces Back

Joey Segura

-

Sep 20, 2024

Fed cuts interest rates for the first time since 2020. 

In 2024, Fed rates reached their highest levels since 2008, which usually results in lower corporate earnings and slowed growth in the stock market.

Generally, rates go up to combat price inflation and come back down to encourage demand in the markets and give a boost to hiring.

So understandably, everyone was pretty excited to hear a 0.5% rate cut announced in Wednesday's FOMC meeting.

There’s a common belief that when interest rates drop, markets surge. And while the latest rate cut definitely has some Bitcoin bulls foaming at the mouth, it’s no guarantee that crypto or stocks will take off right away.

Despite this year's high rates, Bitcoin has already rose from $42,000 to over $60,000. With the S&P 500 also posting impressive YTD gains of over 19%.

So how much more room is there really to grow?

The correlation between Fed rates and Bitcoin isn't entirely clear, but it is worth noting that Bitcoin’s breakout in 2020 didn’t occur until after rates took a sharp turn south.

What we do know is that Bitcoin tends to benefit most during times of economic uncertainty. But with Bitcoin already starting strong at over $60,000, 2020 level multiples begin to feel a bit out of reach, but then again, who could have ever guessed we would see $70,000 Bitcoin in 2021 either?

 - Joey Segura

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© 2024 Giddy. All rights reserved.

Not FDIC Insured · No Bank Guarantee · May Lose Value

DefiQ, Inc. DBA Giddy, is registered with FinCEN as a Money Services Business (MSB), registration number 31000214426385.

DISCLAIMER: Giddy is not a custodian of cryptoassets and does not provide a guarantee of protection; you are responsible for the safekeeping of your cryptoasset private keys. Giddy does not provide financial, investment, tax, or legal advice. No communication from Giddy is intended to imply financial advice, nor that any cryptoasset is low-risk. All cryptoassets involve a significant degree of risk, including the possibility of high volatility or permanent loss.

Giddy provides information from 3rd parties and blockchain networks, and does not guarantee this information is correct, complete, or updated. Cryptoassets are not covered by either FDIC or SIPC insurance. For more information about the risks of virtual currency, see the CFTC’s Customer Advisory, the CFPB’s Consumer Advisory, the SEC’s Investor Alert, and FINRA’s Investor Alert.

Passive income derived from decentralized finance activities such as staking and liquidity farming carries with it additional risks which could include permanent loss of funds. Consult a professional before investing money on the blockchain. Never invest more money than you can afford to lose.