Takeaways
- The Federal Reserve cuts rates: The Federal Reserve announced Wednesday it will cut the federal benchmark interest rate by a half-percentage point (50 basis points), lowering the range to between 4.75% and 5%. Crypto markets responded well to the move, with the price of bitcoin pushing past $63,000.
- US crypto legislation still possible this year: US senator Cynthia Lummis (R-WY) said in an interview Tuesday she thinks crypto legislation could be passed during the lame-duck session of Congress.
- US spot bitcoin ETFs pull in $187 million in inflows: US spot bitcoin ETFs drew $187 million in inflows Tuesday, marking the fourth consecutive day of inflows after a significant drawdown.
- Republicans ask for clarity on crypto airdrops: US representative Patrick McHenry (R-NC) and other top Republican lawmakers sent a letter to SEC chair Gary Gensler asking for clarity on crypto airdrops.
Federal Reserve Cuts Interest Rates by 50 BPS, Crypto Rallies
The Federal Reserve announced Wednesday it is lowering the benchmark federal funds rate by a half-percentage point (50 basis points) to between 4.75% and 5%. It marked the first interest rate cut in more than four years and signaled the Federal Reserve is ready to ease up on its fight against inflation.
The move marked the first time since 2008 the Federal Reserve had cut interest rates by 50 basis points at one meeting. Many analysts had expected a quarter-point percentage cut, but cooling inflation and a soft labor market allowed Federal Reserve chair Jerome Powell to be more aggressive. In August, the Consumer Price Index (CPI), a key inflation metric, dropped to 2.5% year-over-year, roughly hitting Powell’s 2% inflation target.
The long-anticipated move sparked the broader markets. And crypto prices also rallied, with bitcoin pushing to roughly $63,500 and ether increasing to roughly $2,350 respectively.
A low interest-rate environment is widely viewed as a greenshoot for risk assets including crypto, but it remains to be seen if a rate-cutting campaign will ultimately shoot bitcoin and other cryptocurrencies to all-time highs.
🌐 Topic of the week: Global Stablecoin Ecosystem
