The Fed’s announcements about the relaxation of interest rates favored the rise of digital assets. What can happen?
The cryptocurrencies They rise up to 9% in the last 24 hours. The advertisements of the Fed of the beginning of relaxation of interest rates. Bitcoin is approaching US$43,000 after the fall suffered on Monday, while Ethereum advances up to 5% and Solana takes off up to 9%.
The catalyst for these increases has been none other than the Federal Reserve (Fed). He us central bank maintained official interest rates at their current range, between 5.25% and 5.5%, but he made a dovish twist which surprised the market by announcing that it foresees three rate cuts in next 2024.
The optimism was accentuated by the president’s subsequent press conference Jerome Powell who refused to declare victory ahead of time and give dates on when will the possible pivot be executed. “We believe we have done enough, although we are not strongly convinced, and we do not want to rule out the possibility of further increases, although it is no longer the base case,” said the Fed leader.
With him interest rate announcement, The Fed also published its quarterly update of economic projections. The central bank now expects 2023 to end with an underlying inflation rate of 3.2%, up from 3.7% forecast three months earlier. The final rate for 2024 now stands at 2.4%, up from 2.6% previously. Real GDP growth for 2024 has slowed from 1.5% to 1.4%.
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How the Fed’s decision affects cryptocurrencies
With specific regard to the cryptocurrencieshe Fed turn is clearly positive. Historically, maintaining or reducing interest rates tends to inject optimism among investorsas it implies more disposable income and potentially greater investment in various asset classes, especially those that carry more risk such as cryptocurrencies.
On the other hand, There is no big news in the digital asset space. It should be noted that, earlier this week, BlackRock met with the Securities and Exchange Commission (SEC) to inform the regulator of the latest changes to its exchange-traded fund (ETF) proposal. ) of BTC in cash, which have been designed to facilitate access for large banking entities to the fund.
Source: Ambito
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