Federal Reserve (FED) Rate Cut: Big Impact on Crypto!

The crypto world is holding its breath in response to Jerome Powell’s statements. The Chairman of the U.S. Federal Reserve has delivered a crucial message for investors. His comments about interest rates could well redefine the contours of the cryptocurrency market.

The Fed Eases Its Stance on Inflation

Jerome Powell surprised observers during his speech at the Economic Club of Washington D.C. He indeed stated that the Fed would not wait for inflation to reach 2% before reducing interest rates. This announcement marks a turning point in U.S. monetary policy.

The Fed Chairman justifies this stance by citing the “long and variable lags” of monetary policy. He believes that waiting too long could push inflation below the 2% target. As a result, the Fed is now seeking “greater confidence” in returning inflation to its target. This more flexible approach could stimulate the economy more quickly.

Implications for the Crypto Market

The crypto market reacted mixedly to these announcements. Some assets recorded significant gains. For example, Dogwifhat (WIF) and Floki (FLOKI) jumped by more than 20% in 24 hours. Bitcoin, on the other hand, reached a one-month high at $65,025.

The possibility of rate cuts faster than expected is particularly encouraging. Indeed, cryptocurrencies had suffered in recent weeks from uncertainties over monetary policy. A rate cut could rekindle risk appetite and favor investments in the crypto sector.

However, if inflation persists despite the Fed’s efforts, the crypto market could face challenges. Persistent inflation could force the Fed to maintain high rates longer than anticipated, which would dampen risk appetite and could lead to a decline in investments in cryptocurrencies.

Jerome Powell’s statements open new perspectives for the crypto market. The possibility of rate cuts faster than expected could stimulate interest in digital assets. Nevertheless, investors remain cautious and attentive to the Fed’s upcoming decisions. The future of the crypto market in 2024 will largely depend on the evolution of U.S. monetary policy.