Bitcoin Price Reaction to Federal Reserve Rate Cut

Bitcoin price has dropped following the Federal Reserve’s first rate cut since the Covid pandemic, decreasing borrowing rates by 50 basis points.

The U.S. central bank reduced the federal funds rate to a range of 4.75% to 5%. This aggressive cut indicates growing concerns over the U.S. economy, leading to volatility in multiple markets, including cryptocurrencies.

As of 16:40 ET (20:40 GMT), Bitcoin’s price remained flat at $60,189.00. Meanwhile, ETH/USD fell by 1.1% to $2,138.87, and pDOTn/USD experienced a decline of approximately 1.9%.

Cryptocurrency-related stocks have also lost earlier gains. MicroStrategy Incorporated (NASDAQ:MSTR) shares rose by 1.5% during the day, while most Bitcoin miners, such as Marathon Digital Holdings Inc (NASDAQ:MARA) and Riot Platforms (NASDAQ:RIOT), along with crypto exchange Coinbase Global Inc (NASDAQ:COIN), ended the day flat or slightly negative.

This rate cut follows a two-day Fed meeting and comes after a year of aggressive tightening to tackle inflation. Ten out of 19 Fed officials supported at least another half-point rate cut during the last two meetings of 2024.

Historically, rate cuts tend to weaken the U.S. dollar and favor risk assets such as stocks.

Bitcoin has struggled to maintain earlier gains. After reaching highs of $65,000 in August, it has traded around the $60,000 mark in recent days.