Barclays Predicts 25 Basis Point Rate Cut
Barclays, a major investment bank, anticipates a reduction in the Federal Reserve's interest rates in this week's meeting. Expectations are set for a 25 basis point cut, positioning the rate at 3.5%-3.75% alongside a hawkish tone suggesting future rate cut pauses. The forecast responds to current economic conditions and aligns with Barclays' view of the necessary adjustment to interest rates.
The projected rate cut is seen as an adjustment aiming to balance economic pressures and support financial stability. By potentially increasing liquidity, the rate cut could bolster risk assets such as equities and cryptocurrencies, including BTC and ETH. However, the hawkish communication from the Fed might temper expectations of further immediate easing.
Market reactions are poised to focus on the Fed's follow-up statement, with investors closely watching how rate projections evolve. The crypto community may interpret announcements related to liquidity and risk sentiment, as significant for asset allocation amidst changing economic dynamics.
Bitcoin and Ethereum's Potential Responses to Fed Policy
Barclays' macro interest rate forecasts have historically set trends in institutional asset allocations, significantly influencing risk assets like Bitcoin during the 2019 "insurance cuts," which showed muted immediate impact but supported medium-term growth.
According to CoinMarketCap, Bitcoin (BTC) trades at $89,932.69 with a market cap of $1.80 trillion. It holds a 58.55% market dominance. Recent changes show a 24-hour trading volume of $57.20 billion and a 24-hour price decrease of 1.69%. BTC's supply stands near its 21 million maximum.
The Coincu research team highlights potential outcomes of the rate cut scenario. According to the Barclays Research Team, "Expect a 25 basis point cut to 3.50–3.75% with a hawkish pause tone, followed by further cuts in March and June." Historical easing phases have bolstered crypto markets through increased liquidity, favoring BTC and ETH. Technological developments in DeFi could further amplify these assets' performance if institutional engagement in crypto rises with easing monetary policy.