Recently, Jerome Powell, the chairman of the Federal Reserve of the United States of America, indicated that interest rates would be cut in September. Next month, the cryptocurrency sector is likely to witness major movements. Currently, the price of Bitcoin is at $63,051.88. In the past 30 days, it has dropped by around 6.6%. Can the proposed economic action affect the BTC price? Here is an overview!
Major announcement from US Fed chairman on rate cuts
It was during a speech at an economic symposium in Jackson Hole that Powell delivered the sensational blow about the possible rate cuts. When we analyze his statement, we understand that the US government no longer considers inflation as a threat, but that for them the biggest threat is the risk to jobs.
US Economy August 2024: A General Overview
The US Fed Funds Interest Rate is now at 5.5%. At the end of 2019, it was around 1.75%. In March 2020, it was lowered to 0.25%. It remained at that level until the end of February 2022. It then slowly but steadily climbed upwards. At the end of December 2022, it even reached 4.5%. At the end of July 2023, it peaked at 5.5%. It has remained at that level since then, without fluctuation.
The United States civilian unemployment rate is now 4.3%. While it was 14.8% in April 2020, it has dropped to 3.4% in April 2023. This year, the rate has been steadily increasing. At the beginning of this year, in January 2024, it was almost 3.7%. In May, it crossed the 4.0% mark. Last month, it was 4.1%.
It appears that the US government is concerned about the current trend in the US employment landscape, which looks very bleak.
Impact of US Federal Reserve rate cuts
A rate cut usually stimulates the economy because it makes borrowing cheaper. The proposed rate cut in the US would pump more money into the economy. It would stimulate spending and investment.
What Bitcoin Enthusiasts Can Expect
It stands to reason that a rate cut would make bonds unattractive. That means there’s a chance that the funds currently parked in bonds would be diverted into the crypto market. There have been several examples in the past that support the theory that a Fed rate cut has a positive impact on the price of BTC.
Let’s take a look at what happened in the BTC market in March 2020.
Despite the global economy facing a severe pandemic, the Bitcoin market has seen a steady rise even amid the uncertainty and has remained largely unaffected by the global economic slowdown.
In conclusion, we can expect a lot of momentum in the cryptocurrency market, especially the Bitcoin market in the coming months. Maybe this is the beginning of the next BTC bull run? Do you agree? Comment!
See Also: Ethereum News: ETH Price Drops Again! Will This Cause the Next Crypto Crash?
