Bitcoin Outlook Post Fed’s 0.25% Rate Cut: Historical Patterns And Predictions

[Ben Graham]

In a move that could signal a bullish shift for Bitcoin (BTC) and the broader cryptocurrency market, the Federal Reserve (Fed) announced a 25 basis points (bps) interest rate cut, bringing the new rate range to 3.5% to 3.75%. 

Bitcoin Poised To Surge Toward $100,000?

Kevin Hassett, the White House economic adviser and a leading candidate to become the next Fed chair, commented to the Wall Street Journal CEO Council that there is “plenty of room” for additional interest rate cuts. 

He stated, “If the data suggests that we could do it, then — like right now, I think there’s plenty of room to do it.” Hassett, who is President Donald Trump’s preferred choice for the Fed chair position after Jerome Powell’s tenure concludes, has been critical of Powell for being “too late” in lowering rates.

While the last rate cut in October had minimal impact on the Bitcoin price, analyst Michael van de Poppe believes that the current rate cut could significantly benefit the cryptocurrency. He characterized it as a “great move” for Bitcoin and noted that a breakout above $92,000 might be indicative of future bullish momentum. 

Van de Poppe expressed optimism about Bitcoin’s ability to maintain the support level between $91,500 and $92,000, suggesting that if it does, there could be a pathway for Bitcoin to approach the $100,000 mark.

Can BTC Avoid Historical 10% Decline?

Market expert Ash Crypto pointed out that historically, each of the last four times the Fed slashed rates by 25 bps, Bitcoin experienced a 5% to 10% decline shortly thereafter. Despite this pattern, Ash noted that the current market setup differs from previous scenarios, suggesting that different dynamics could be at play.

Several positive factors underpinning this optimism include the conclusion of quantitative tightening (QT) after a three-year period. Should Powell hint at the possibility of quantitative easing (QE) in his forthcoming remarks, it could spur a further bullish trend in the market. 

Additionally, with this being the third rate cut, Ash asserted that there is potential for increased liquidity to flow back into the markets, which historically benefits risk assets like Bitcoin.

Featured image from DALL-E, chart from TradingView.com