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coinpedia 2024-12-03 08:33:04

Fed Rate Cut in December: Could It Drive Bitcoin Toward $100K?

The post Fed Rate Cut in December: Could It Drive Bitcoin Toward $100K? appeared first on Coinpedia Fintech News The crypto market is now betting heavily that the US Federal Reserve will cut interest rates by 0.25% in December. According to the CME FedWatch tool , the chances of this happening have risen to 74.5%, up from 66% just a few days ago. This means more and more investors believe the central bank will take action at its meeting on December 17-18. If the Fed cuts rates, it would be the third reduction this year. What Does a Rate Cut Mean to Crypto? A rate cut would lower the cost of borrowing money for individuals and businesses. When interest rates are lower, it becomes cheaper to take out loans, which can encourage people to spend and invest more. For the stock market and high-risk investments like Bitcoin, rate cuts are often seen as a positive development. Investors may feel more comfortable taking risks and investing in assets that could offer higher returns—like cryptocurrencies. Right now, the Federal Reserve’s interest rate is between 4.5% and 4.75%, following two earlier cuts this year. A further reduction would signal a more supportive economic environment, likely encouraging more investors to put their money into riskier assets such as Bitcoin. However, Marko Papic, Chief Strategist at BCA Research, predicts the US Federal Reserve will cut interest rates in December. He also believes the US dollar could peak by mid-2025, driven by potential economic growth disappointments under Donald Trump. What Are the Fed Officials Saying? Federal Reserve officials are signaling that a rate cut could be coming soon. Governor Christopher Waller mentioned on December 2 that he’s leaning toward supporting a cut, but it will depend on upcoming economic data, like inflation and job reports. Likewise, New York Fed President John Williams has said that interest rates might be lowered gradually, but he hasn’t specified when that might happen. Essentially, the decision will hinge on how the economy performs in the next few weeks. Bitcoin’s Positive Reaction Bitcoin has seen a significant price increase this year, more than doubling in value. Many analysts are optimistic that Bitcoin could break the $100,000 mark by the end of 2024. With a potential rate cut from the Fed, Bitcoin’s price could continue its upward momentum, benefiting from the increased appetite for riskier investments.

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