- The minutes of the FOMC meeting held in July indicate that a rate cut will occur in September.
- Progress on inflation and rising unemployment justify 25bp rate cut
- Bitcoin jumped more than 3% after the minutes were released.
- Ethereum and other altcoins also saw their share of gains.
Bitcoin (BTC) and several other cryptocurrencies briefly gained on Wednesday after the Federal Open Market Committee (FOMC) released the minutes of its July meeting.
Bitcoin and Cryptocurrency Market Could Be About to See a Bullish Recovery
The minutes of the July FOMC meeting indicate that the Federal Reserve (Fed) plans to cut interest rates by 25 basis points in September. Several participants agreed that the United States has made progress in slowing inflation, as it is now moving toward the 2% target. Participants also noted that rising unemployment and declining inflation provided a rationale for cutting rates by 25 basis points in the coming months.
Many participants also agreed that cutting rates too late would weaken the economy. After the minutes were released, CNBC reported that the consensus among traders is that there is 100% certainty that the Fed will cut rates in September.
So the question for most traders is no longer whether the Fed will cut rates but by how many basis points the agency will cut rates.
Following the release of the minutes, the total market capitalization of cryptocurrencies jumped by more than 2%. Bitcoin, which struggled to stay between $59,000 and $60,000 last week, jumped by more than 3%, just below $62,000. Ethereum (ETH) also rose by more than 2% following the release of the report.
Risk assets such as cryptocurrencies and stocks tend to perform well in a lower interest rate environment.
Cardano (ADA) and Avalanche (AVAX) also saw notable gains of 8% and 5% respectively. This was one of their best daily performances since the market began to decline in late March to mid-April. Chainlink (LINK), Polkadot (DOT), Uniswap (UNI), Polygon (MATIC), Near Protocol (NEAR), and Internet Computer (ICP), among other tokens, also saw their share of gains.
Some top cryptocurrencies
The gains made on these cryptocurrencies have also caused a surge in derivatives liquidations, with short traders suffering over $31 million in liquidations in the last 4 hours.
Several members of the crypto community have expressed confidence that the recent surge could be the resumption of the market’s bull run, especially if the Fed ends up cutting rates in September.
