Expected Fed Rate Cuts Support Bull Case in Bitcoin, But There is a Catch CoinDesk

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News Source : CoinDesk

News Summary

  • The S&P 500, a proxy for worldwide investor risk appetite, saw bouts of risk aversion during the early stages of the rate-cut cycle.The shaded area shows recessions followed the Fed pivot to rate cuts.Historically, the Fed has resorted to rate cuts only with recession at the doorstep..
  • That leads to tighter financial conditions, leading to investors reducing exposure to risk assets like bitcoin.The dollar index, which gauges the USD's exchange rate against major fiat currencies, initially strengthened after the Fed kicked off the rate-cut cycle in mid-2000, September 2007, and August 2019..
  • That has led to forward-looking markets treating rate cuts as a harbinger of bad news and seeking safety in the U.S. dollar.Recessions have consistently followed the onset of easing cycles over the past 60 years, according to data tracked by investment banking firm Piper Sandler..
  • Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin..
  • Thus, central banks often combat the same with monetary stimulus.The dollar is a global reserve currency, with an outsized role in global trade, international debt, and non-bank borrowing..
  • Left to market forces, a recession can lead to sharp decline in investors' risk taking ability and asset price deflation..
The Fed minutes released Wednesday show policymakers could cut rates this year.Past data show an economic recession tends to follow as the Fed begins cutting rates.Th [+3089 chars]

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