Bitcoin and Ethereum Experience Marginal Gains as Federal Reserve Considers ‘Policy Easing’ in September – Decrypt

Bitcoin’s price is up following the Wednesday release of the U.S. Federal Reserve’s minutes from its July meeting, which suggests that an interest rate cut will come in September. Market watchers and investors are widely expecting the move.

The price of the biggest digital coin stands at $60,500 as of writing, per CoinGecko, after having jumped 2% in 24 hours. Ethereum, the second-biggest asset, is up marginally, too, trading hands for $2,640—a 1.8% rise.

The minutes showed that most of the officials at the meeting last month agreed that it would be time to cut interest rates depending on the next round of economic data.

“The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting,” it read. 

All eyes will be on the central bank’s chair Jerome Powell on Friday, who’s due to speak at the Jackson Hole Monetary Policy Symposium in Wyoming and reveal more about a timeframe for cuts.

The Fed started aggressively raising rates in 2022 in a bid to tame 40-year high inflation following the Covid-19 pandemic. 

The tightening negatively hit Both stocks and crypto at first, as investors tend to avoid such assets—dubbed “on-risk”—when borrowing is expensive. 

But since last year, such assets have done well, particularly as the booming world of Artificial Intelligence and the approval of spot Bitcoin ETFs has led to a flurry of investment into U.S. equities and crypto. 

The central bank has since been working to get inflation down to 2%. Wednesday’s minutes showed that it is closer to reaching that target. 

“Participants observed that inflation had eased over the past year but remained elevated and that, in recent months, there had been some further progress toward the Committee’s 2 percent inflation objective,” the minutes read.

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If you’re a keen observer of the financial world, the recent movement of Bitcoin’s price following the release of the U.S. Federal Reserve’s meeting minutes is likely to catch your eye. The anticipation of an interest rate cut happening in September has caused a stir among market watchers and investors alike. The general consensus seems to be pointing towards this expected move, with Bitcoin’s value currently standing at $60,500, according to CoinGecko, after experiencing a 2% surge in just 24 hours.

Ethereum, the second-largest digital asset, has also seen a slight increase in its value, now trading at $2,640, marking a 1.8% rise. The recently disclosed meeting minutes revealed that a majority of officials present agreed that it’s time to consider cutting interest rates, pending the arrival of the next set of economic data.

“The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting,” a statement from the minutes read. All eyes are now on Jerome Powell, the chair of the Federal Reserve, who is scheduled to speak at the Jackson Hole Monetary Policy Symposium in Wyoming on Friday. It is expected that he will provide more insights into the anticipated timeline for these interest rate cuts.

Beginning in 2022, the Federal Reserve embarked on a journey of aggressively raising interest rates in an effort to curb the 40-year high inflation rates spurred by the aftermath of the Covid-19 pandemic. This tightening initially had a negative impact on both stocks and cryptocurrencies, as investors tend to shy away from such assets, classified as “on-risk,” when borrowing becomes expensive.

However, over the past year, these assets have shown resilience and growth, especially with advancements in Artificial Intelligence and the approval of spot Bitcoin ETFs fueling increased investments into U.S. equities and cryptocurrencies. The central bank has been striving to reduce inflation to 2%, and the latest minutes suggest that they are nearing their target.

“Participants observed that inflation had eased over the past year but remained elevated and that, in recent months, there had been some further progress toward the Committee’s 2 percent inflation objective,” the minutes highlighted. As we look forward to further clarity from Jerome Powell’s upcoming speech, the financial world awaits more definitive guidelines on the direction of interest rate policy and its potential impact on various asset classes.