After months of anticipation, the Federal Reserve finally slashed interest rates on Wednesday, but the crypto market reaction has been largely muted.
Apart from BNB’s rise to a new all-time high of $1,000, the prices of major cryptocurrencies have barely budged. Some market analysts say that underscores the sense that traders aren’t confident that the Fed has pivoted to a less strict monetary policy direction.
David Siemer, CEO of Wave Digital Assets, a cryptocurrency asset management firm, predicts that the rate cut will push major cryptocurrencies, such as Bitcoin and Ethereum, higher.
“Bitcoin could rise toward new all-time highs of around $130,000 by year’s end,” Siemer said in comments shared with DL News, while adding that Ethereum could go as high as $6,000.
But the immediate market reaction likely indicates that one rate cut isn’t enough to get traders excited. Investors appear to be holding their breath for confirmation that more monetary policy easing is on the way.
“A Fed cut is a tailwind, not a paradigm shift in the market,” Ira Auerbach, a former Nasdaq executive and current head of Tandem at Offchain Labs, said in comments shared with DL News. “One cut won’t set the trend, but the direction of travel favours crypto.”
Other analysts agree that the move was already baked in.
Tom Bruni, head of markets and retail investor insights at Stocktwits, framed the market’s lethargy as a textbook case of “sell the news,” noting that cryptocurrencies, equities, and bonds had already rallied in anticipation of the rate cut.
Similarly, Chris Rhine, head of liquid active strategies at Galaxy, said investors had priced in the rate cut. Rhine added that traders might cling to the Fed’s forward guidance about further rate cuts in the near future.
The crypto market’s north star still points higher, according to these analysts. That’s because lower borrowing costs traditionally juices up risk assets like stocks and cryptocurrencies.
Crypto market movers
Bitcoin is up 0.8% over the past 24 hours to trade at $117,276.
Ethereum has risen 2.0% over the past 24 hours trading at $4,584.
