Donald Trump has once again stirred up the markets... This time, his strong criticisms of the Fed's high interest rates have driven Bitcoin upwards. Coincidence or real catalyst ? Analysis of the connections between monetary policy, market sentiment... and thriving cryptocurrencies.
After reaching $109,343 on July 9, Bitcoin continued its upward trajectory, benefiting from former US President Donald Trump’s statement. Trump claimed that the federal funds rate was “at least 3 points too high,” suggesting that a 300 basis point (3%) reduction is necessary.
This unexpected position immediately had a positive impact on BTC’s price. Within 30 minutes of Trump’s post on Truth Social, the price of the leading cryptocurrency began to climb steadily. Investors are anticipating the short-term consequences of such a measure.
According to analysts at The Kobeissi Letter, such a decision by the US Federal Reserve would be unprecedented in modern history. No Fed rate cut has ever exceeded 100 basis points, even during the 2008 crisis or the emergency action in March 2020.
Certainly, the potential savings on public debt are estimated at $174 billion in the first year, or even $2.5 trillion over five years. However, analysts warn against inflationary risks. Such a cut could reignite inflation beyond 5% and cause a sharp decline in the US dollar, potentially exceeding 10%.
For Bitcoin, the consequences are clear : a sudden drop in interest rates would be perceived as monetary stimulus. This should accelerate capital inflows to safe-haven assets like BTC. Although the likelihood of such a Fed decision remains unknown, the immediate market reaction suggests investors are positioning themselves for upside risk in Bitcoin.
Although future Fed decisions remain uncertain, the Bitcoin market appears clearly stimulated by Trump’s comments. Savvy investors should stay attentive to upcoming developments that could have lasting effects on prices.
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