Fed’s lean toward September rate cut bullish for Bitcoin

The possibility of the US Federal Reserve cutting interest rates in September looks positive for Bitcoin and cryptocurrency investors, QCP Capital analysts wrote in an August 1 report.

Minutes of the July 31 Federal Open Market Committee meeting revealed that Fed Chairman Jerome Powell and other officials at America’s largest bank decided to keep interest rates unchanged.

Powell and the Fed maintained tight monetary policy for another month, keeping interest rates in the 5%-5.5% range as the regulator awaits more positive economic data.

According to QCP Capital, the FOMC minutes show the Fed shifting toward lenient policies as the final quarters of the year approach. “A September rate cut is fully priced in,” QCP analysts wrote in an Aug. 1 note.

Jag Kooner, head of derivatives at Bitfinex, echoed QCP’s sentiment, adding that the September rate cut would support bullish momentum and improve market liquidity. Bitcoin (BTC) and other cryptocurrencies, viewed as risky assets, will benefit from greater capital inflows as investors seek higher returns off-exchange.

“There is a lot of confidence in the market right now, especially since even potentially negative news like the Mt. Gox Distribution, the German Government sell-off, and many recent major Chain moves have failed to significantly impact the Bitcoin price downward,” Kooner said.

Bitcoin adoption is increasing

Bitcoin was created as a decentralized alternative to trustless centralized systems. Fifteen years after its launch, the leading cryptocurrency remains at the center of conversations around national reserves and sovereign assets.

US presidential candidates such as Donald Trump and Robert F. Kennedy Jr. have proposed creating a sovereign Bitcoin reserve. America’s current $12 billion stockpile would make up the bulk of such a move, while RFK Jr. has advised the US to buy more Bitcoin.

If the US goes ahead with this plan, it could set a precedent for other countries to add Bitcoin as a reserve asset, which could bring more Bitcoin under state control and transform the broader crypto landscape.

While some advocates hail the move as the next step in Bitcoin adoption, skeptics wonder whether government-owned Bitcoin treasuries are part of the vision of Bitcoin’s infamous creator, Satoshi Nakamoto.