Will Rate Cuts Restart Crypto's Bull Run?

The Fed just cut interest rates for the first time since COVID, as expected, lowering its key policy rate by an aggressive 50 basis points. This long-awaited decision sparked immediate excitement among investors across stocks and crypto.

Powell’s money printer has finally been reactivated, and here’s why many people in the market are feeling positive that these rate cuts might kickstart another crypto bull run 👇

In 2022, the Fed raised interest rates to tackle high inflation, which made borrowing more expensive and led to falling asset prices, resulting in a bear market. However, with lower interest rates, many expect monetary easing that could gently guide the global economy into a "Soft Landing."

If inflation doesn’t spike again and rate cuts help keep unemployment stable, central bankers could achieve something incredible—removing major economic uncertainties and delivering a level of global economic stability we haven’t seen in decades!

Although the Fed's latest economic projections seem to favor more future rate cuts, they also reflect how uncertain things are, with inflation forecasts being lowered, flat GDP estimates, and non-trivial upticks in unemployment expectations.

The greatest economic risk has shifted from higher inflation to falling employment, as shown by the decision to cut rates. Even though Federal Reserve members and other central bankers are confident they can manage these risks with further rate cuts, any continued economic decline could rapidly devolve into serious recession concerns.

Global bond yields that had been increasing since Tuesday dropped only slightly after the rate cuts were confirmed, suggesting the market had already factored this in with earlier moves downwards since July. While Bitcoin briefly jumped about 2% right after the rate cut news, markets started selling off soon after, erasing those gains before the day ended.

While the initial excitement around the rate cuts was clear, the market’s quick reversal shows that uncertainty still looms. Investors are now carefully watching how the economy reacts to these changes, with hopes pinned on a smooth transition but wary of potential bumps ahead. Whether this will truly ignite the next crypto bull market or trigger deeper recession concerns remains to be seen as the balancing act between inflation, employment, and growth continues to unfold.