Fed Cuts Rates as Bitcoin Continues Roaring

The Federal Reserve on Thursday slashed interest rates in an expected decision that could give "risk-on" assets like Bitcoin a further boost—and the top digital asset is already surging in recent days, setting multiple all-time high price points following Donald Trump's election win.

America's central bank approved a quarter-point interest-rate cut—a move backed by all 12 Fed voters. In September, the Fed cut by 50 basis points in its first such reduction since it aggressively raised rates in 2022.

Bitcoin and other cryptocurrencies have largely benefited from low interest rates because they, like tech stocks, tend to experience more volatile price movements.

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But in 2022, the central bank aggressively hiked interest rates in a bid to tame inflation amid the COVID-19 pandemic, making such investments less attractive. Now that inflation is in check, the central bank can make it cheaper to borrow money again.

"The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance," the Fed said in a statement Thursday.

Matt Mena, crypto research strategist at exchange-traded fund (ETF) issuer 21Shares, said in a statement provided to Decrypt that the latest cut could give crypto a further boost.

"The Fed's 25 bps rate cut introduces an economic boost favorable to risk assets like Bitcoin," he said. "Combined with Trump's pro-crypto policies, this creates a supportive macro environment for Bitcoin."

But the election-induced "Trump trade" was already giving Bitcoin—and other cryptocurrencies—a boost, as experts told Decrypt ahead of the Fed's move.

The world's largest crypto is already surging off the back of Donald Trump's Tuesday victory, given Trump's many promises to help the industry. It is now priced at $76,154, CoinGecko data shows, an 8% rise over the past seven days. Earlier Thursday afternoon, BTC rose to the current all-time high price of $76,677.

Edited by Andrew Hayward