The Fed Lowers Its Rates Again: Has The Hour Of The Crypto Bull Run Arrived?

The American Federal Reserve took a decisive step this Thursday by lowering its benchmark interest rate by 25 basis points, bringing it to a range of 4.5%-4.75%. This decision, coming on the heels of Donald Trump’s electoral victory, immediately propelled the crypto market to new heights, with Bitcoin reaching an all-time high of $76,951.

A Unanimous Decision in a Charged Political Context

The Fed made its second consecutive rate cut at its Federal Open Market Committee (FOMC) meeting, marking a significant shift in its monetary policy.

This unanimous decision comes after a more aggressive first cut of 50 basis points in September, reflecting a more measured approach by the central bank.

Jerome Powell, the chairman of the Fed, sought to dispel concerns about political influence on the central bank’s decisions. At his press conference, he clearly stated that Donald Trump’s victory had “no effect” on short-term monetary policy.

In response to questions about his future at the helm of the institution, Powell firmly declared that he would not resign if Trump asked him to, emphasizing that his dismissal would be “against the law.”

The central bank justifies its decision by an overall improvement in labor market conditions, despite a still low unemployment rate. Inflation, while progressing towards the 2% target, remains “somewhat high,” according to the official statement.

Immediate Impact on Crypto and Traditional Markets

The Fed’s monetary easing following the victory of Donald Trump has triggered an unprecedented wave of optimism in the crypto market. Bitcoin seized the opportunity to shatter its previous record by reaching $76,951.

The cryptocurrency sector demonstrates marked optimism in light of this dual political and monetary catalyst. Analysts predict a particularly favorable environment for the development of digital assets under the Trump administration, whose electoral platform has clearly shown support for the crypto industry.

This favorable context, bolstered by the Fed’s accommodative policy, suggests a continuation of the bullish momentum for crypto assets. Traditional markets also celebrated these announcements, with the S&P 500 and Nasdaq advancing by 0.8% and 1.5%, respectively.

The Fed’s initiative has inspired other central banks: the Bank of England followed with a similar 25 basis point cut, while Sweden’s Riksbank opted for a more pronounced reduction of half a percentage point.

As for December, uncertainty remains. The CME FedWatch tool indicates that the probability of a pause in rate cuts has dropped to 28%, down from 33% before the meeting. This shift suggests that markets are banking on the continuation of a loose monetary policy.

Monetary easing, combined with a changing political landscape in the United States, could continue to support the bullish crypto momentum in the coming months, as investors seek alternative safe-haven assets.