The Federal Reserve has implemented another strategic rate cut, reducing the federal funds rate by 25 basis points to a target range of 4.50%-4.75%, the lowest level since March 2023!
The Fed's strategy aims to achieve a “soft landing” for the economy and it reflects a careful realignment of policy as inflation gradually approaches their 2% target, with their preferred indicator now at 2.1% (core inflation at 2.7%), while the labor market shows signs of cooling.
How does this impact the overall crypto market?👀
When interest rates are lowered, borrowing becomes less expensive, which typically increases the money supply in circulation as both individuals and businesses can access cheaper credit.
This extra liquidity often flows into various investment vehicles, including cryptocurrencies, as investors seek higher yields in alternative assets.
For crypto markets specifically, the increased liquidity and risk appetite that comes with lower rates historically has correlated with higher crypto valuations, as investors may be more willing to put money into higher-risk, higher-reward assets. 📈
Additionally, because rate cuts generally weaken the dollar's strength, some investors turn to cryptocurrencies as an alternative store of value, similar to how they might view gold in traditional markets.
Are you prepared for the Bull Market?
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