Cryptocurrency Markets Remain Stagnant After Federal Reserve Decides on Rate Reduction
The Federal Reserve's recent decision to lower the target range for the federal funds rate has been met with a mixed response from industry experts, who see it as a positive catalyst for the cryptocurrency markets.
Qin En Looi, managing partner at venture capital firm Onigiri, stated that the rate cut is a positive signal that liquidity is back on the table, which could potentially boost the crypto market. Doug Colkitt, a founding contributor at Fogo, echoed this sentiment, asserting that the Fed's move could kick off the next leg of growth in the crypto market.
However, Colkitt emphasized that while rate cuts might initiate the next leg, real adoption is what keeps the crypto market running over time. This sentiment was shared by Greg Magadini, director of derivatives for digital asset data provider Amberdata, who stated that the Fed's independence is crucial for asset prices, especially for Gold and Bitcoin.
Several analysts described the rate cut as a positive development for the markets. Julio Moreno, head of research for CryptoQuant, stated that the market had long anticipated the 25 bp rate cut. Moreno also suggested that the rate cut could mark the start of a rally into Q4.
Despite the optimistic outlook, no significant price rally was observed in Bitcoin or Ether immediately after the rate cut announcement. Ether's price went from roughly $4,600 to roughly $4,430 and then climbed back to approximately $4,620. Brian Huang, cofounder of fintech firm Glider, indicated that cryptocurrency markets had widely priced-in the rate cut.
Thomas Perfumo, global economist at Kraken, stated that the Federal Reserve and markets expect further rate cuts through late 2025 and into 2026, which is generally supportive for risk assets including crypto. However, Perfumo also highlighted that the performance of the crypto markets in the future will depend on macroeconomic indicators like employment and inflation data.
Magadini also raised concerns about the independence of the Fed, especially in 2026 when a new Fed Chairman will take over. This uncertainty could potentially impact asset prices, including Bitcoin and other cryptocurrencies.
In conclusion, while the Federal Reserve's rate cut is seen as a positive development for the cryptocurrency markets, the long-term performance of these assets will depend on factors such as real adoption, innovation in the crypto space, and macroeconomic indicators.
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