FED's 2024 Interest Rate Cut: A Boon for Crypto?

• U.S. Federal Reserve's Interest Rate Pause May Bolster Cryptocurrency Prices
• BlackRock's Take on Fed's Policy
• The Impact on Cryptocurrencies
• Implication for Crypto-Investment
• Can Enthusiasm for Cryptocurrency Wane?
• The Upcoming Bitcoin Halving in 2024

U.S. Federal Reserve's Interest Rate Pause May Bolster Cryptocurrency Prices

The recent decision by the U.S. Federal Reserve to hold off on increasing interest rates, and the potential reduction in rates in 2024, could potentially escalate crypto prices and correlated stocks, according to market experts.

BlackRock's Take on Fed's Policy

The Impact on Cryptocurrencies

Cryptocurrencies are anticipated to be positively impacted by this dovish stance. Post the Fed's announcement of a potential interest rate cut next year, the shares of major crypto exchange Coinbase surged almost 7.7%. Rosenberg believes the bullish sentiment could persist until new economic data comes to light. He argued, The Fed is more than prepared to facilitate a relaxation in financial conditions.

Experts suggest that the retreat from rate increases and expectations for future reductions could expedite the adoption of cryptocurrencies by both institutional and retail investors.

Implication for Crypto-Investment

Henrik Andersson, the chief investment officer at Apollo Crypto, predicts, Today's pause and the anticipated reduced interest rates in the upcoming year will likely serve as a positive catalyst for cryptocurrencies and crypto-related stocks.

Indications of increasing institutional interest are already discernable. According to CoinShares data, last week saw record weekly inflows into crypto investment products. Blockchain stocks attracted $126 million in new investments while crypto funds experienced their eleventh consecutive week of inflows, accumulating another $43 million.

Can Enthusiasm for Cryptocurrency Wane?

Even though reduced rates could potentially spur crypto price increases in the short term, Andersson senses that the shift may somewhat dampen the enthusiasm for asset tokenization. As yields rise in decentralized finance (DeFi), investors could find higher returns compared to real-world asset transactions in a low-rate environment.

The Upcoming Bitcoin Halving in 2024

Despite this, the upcoming Bitcoin$42,260 -0.64% halving in 2024 is perceived as the most powerful stimulus looming for the wider crypto universe. Previous market cycles have seen this scheduled supply reduction precede exponential bull runs.

Edited by Jonathan Stoker