Bitcoin Crosses $62K Threshold After Fed Rate Cuts

The Fed’s 50 basis point cut and the first bitcoin (BTC) purchase by a presidential candidate kept digital assets in the green during East Asian trading hours.

Fed members expect the median benchmark rate to fall to 4.4% by year-end, implying another cut of about 50 basis points (bps) at the next two Federal Open Market Committee (FOMC) meetings.

Bitcoin is trading around $62,000, up 2.4% in the last 24 hours, while the CoinDesk 20 (CD20), a measure of the largest digital assets, is up 3.4%.

Solana’s SOL is up 6% to lead the gains among the majors, while BNB Chain’s BNB token, XRP and Cardano’s ADA are up as much as 4.5%. Dogecoin (DOGE) and shiba inu (SHIB) coins are both up 4%.

ByBit’s Corporate President Chris Aruliah’s views on the impact of the interest rate cut on the crypto market are as follows:

“The global economic slowdown predicted by economic indicators and geopolitical complexities is dampening investor sentiment. Therefore, while a 0.5% cut in the Fed’s policy rate could provide short-term support to the cryptocurrency market, it is crucial to remain vigilant against potential challenges posed by economic uncertainty and market volatility.”

Arthur Hayes of Maelstrom argues that rate cuts are not necessary and that a 50 basis point rate cut would trigger a brief market rally but would ultimately reveal deeper problems in the global financial system and lead to lower prices.

“I don’t think they should raise rates. I believe the U.S. economy is very strong. If you’ve seen the GDP pressures over the last eight or nine quarters, there’s been consistent growth. If they decide to continue to lower rates, inflation will accelerate into the fourth quarter.”

Hayes argues that heavy spending by the US government has fuelled rapid economic growth, which has benefited Kamala Harris’ election chances, but that cutting interest rates amid high inflation is seen as a mistake.

The market is divided on the impact of the Fed’s 50 basis point cut, with mixed reactions across asset classes, as concerns about growth and a potential recession weigh on investor sentiment, Presto Research wrote in its weekly newsletter.

“Judging by the market turmoil last night, there are concerns about growth but the market needs to relax to recover. We can say that we are now in the ‘good news is good news’ period.”

Polymarket investors are almost certain that the Fed is far from stopping its rate cuts.

Bettors give a 41% chance of a 100 basis point cut by the end of the year, while a 125 basis point cut is given a 38% chance.

There is a 65% chance of a 25 basis point cut in November, and a 26% chance of a 50 basis point cut.

For December, the consensus is for a 50% chance of a 25 basis point decrease and a 33% chance of a 50 basis point cut.