The rate cut, which brings the federal funds target range to 4.5%-4.75%, is the latest in a series of dovish moves by central banks around the world.
In its statement, the Fed cited easing labor market conditions and progress toward its 2% inflation target, although prices remain somewhat elevated.
“Inflation has made progress toward the Committee’s 2% objective but remains somewhat elevated,” the Federal Reserve noted.
A Boost for Bitcoin, but Not for the Broader Market
Bitcoin, the largest cryptocurrency by market capitalization, briefly surpassed $76,000 after the Fed’s decision, reaching a new record high of $76,943.12.
Bitcoin’s new all-time high. Source: CoinMarketCap
The surge was fueled by optimism surrounding the election results and a record-breaking inflow of $1.38 billion into Bitcoin ETFs on Nov. 7.
However, the broader crypto market told a different story. The global market capitalization stood at $2.49 trillion, reflecting a slight dip of $1.31 billion.
DeFi (decentralized finance) volume accounted for just 5.3% of the 24-hour total, while stablecoins dominated trading activity, making up 96% of the overall volume.
A Disconnect Between Crypto and Traditional Markets
The muted reaction in the crypto market is notable, given the historical correlation between crypto prices and traditional market sentiment.
High interest rates tend to deter investors from riskier assets like cryptocurrencies, so crypto investors would typically welcome the rate-cut trend.
However, the crypto market has decoupled from traditional markets in recent months, with investors taking a more nuanced view of the economy and interest rates.
As a result, the Fed’s move had little impact on the broader crypto market, with most major cryptocurrencies trading flat or falling in the aftermath.
At the time of writing, Bitcoin was trading at $75,913.87, up 1.1% from the previous day but retracing from overnight levels.
Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors.
Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.
