The Federal Reserve (Fed) is widely expected to lower its Fed Funds target rate at its meeting today, in spite of stronger-than-expected market growth and job creation statistics with just 3.7% unemployment.The shift in policy from stable to declining comes on the belief that the economy is actually in danger of a recession. A reduction in the benchmark rate could be seen as a spur in the side to keep the economy strong.
Federal Reserve Rate Cuts Bullish on Bitcoin?As the market moves in a tenuous direction, many analysts see the rate reduction as strongly bullish for Bitcoin (BTC). For example, Fundstrat founder Tom Lee, famous for his prediction of $25K BTC by the end of 2018, made his sentiments clear on Twitter.
Lee’s analysis is simple — a weaker dollar will mean good things for Bitcoin. His logic would indicate that the market is seeking stability, and will turn to store of value assets like Bitcoin in spite of substantial debate as to the viability of BTC as a potential hedge against economic change. The U.S. is not the only economic region where such changes are occurring. The European Central Bank (ECB) recently announced a fresh stimulus package and reduced rates as well, resulting in similar bullish analyses on Twitter.
Weekend is starting in US, and past few weekends led to weakness in #bitcoin— Thomas Lee (@fundstrat) July 27, 2019
– Fed is expected to cut interest rates next week.
– Lower rates = weaker USD = Upside for Bitcoin $BTC
– So expect Bitcoin to break the pattern this weekend and actually rise this weekend. #BTFD pic.twitter.com/algixbrrEB
ROCKET FUEL: They’re going to cut rates and print money right as we march towards the Bitcoin halving.— Pomp 🌪 (@APompliano) July 25, 2019
Buckle up. This will be wild 🚀 pic.twitter.com/QotDXKTJRj