The Federal Reserve, led by Chairman Jerome Powell, is poised to lower interest rates by 25 basis points, ending October 29 amid market expectations for policy easing measures.
This anticipated rate cut could bolster crypto markets, with Bitcoin and Ethereum likely to benefit from improved liquidity conditions, potentially triggering bullish sentiments in DeFi and Layer 1 tokens.
Key Developments, Impact, and Reactions
The conclusion of QT suggests a halt in the selling of Treasuries, easing liquidity pressures and potentially increasing risk appetites in both traditional and crypto markets. Lower borrowing costs are expected to drive asset valuations upwards, historically leading to crypto gains. Key assets like Bitcoin and Ethereum are anticipated to appreciate as a result.
Industry experts demonstrated varied reactions. Arthur Hayes, BitMEX Co-founder, noted, "Rate cuts are the fuel. Look for Bitcoin and ETH to front-run the trend as the Fed pivots from tightening to support. The real party starts when QT halts." Meanwhile, Raoul Pal, CEO of Real Vision, highlighted that every such cycle historically triggers major moves in crypto.
Industry experts demonstrated varied reactions. Arthur Hayes, BitMEX Co-founder, noted, "Rate cuts are the fuel. Look for Bitcoin and ETH to front-run the trend as the Fed pivots from tightening to support. The real party starts when QT halts." Meanwhile, Raoul Pal, CEO of Real Vision, highlighted that every such cycle historically triggers major moves in crypto.
Historical Context and Expert Insights on Rate Cuts
Did you know? When the Federal Reserve last cut rates and ended QT in March 2020, crypto markets quickly rebounded, leading to substantial gains for Bitcoin and Ethereum, setting a precedent for investor optimism after dovish shifts.
Bitcoin, as recorded, is priced at $113,111.02, commanding a market cap of $2.26 trillion and holding a 59.12% dominance. Its 24-hour trading volume increased by 42.91%, topping $65.63 billion, reflecting recent market shifts. Over a one-week span, Bitcoin saw a 4.67% increase, aligned with expectations during rate adjustments.
According to research, the rate cut and QT end mark potential bullish shifts, particularly for DeFi and Layer 1 tokens, as observed previously in liquidity expansion cycles. Historical trends suggest DeFi protocols will see enhanced activity, contingent on continued Federal Reserve confirmation and crypto market response.