The Impact of FOMC’s Rate Cut on Bitcoin’s Soaring Price
On November 7th, the Federal Open Market Committee (FOMC) meeting led to the widely expected decision of a 25-basis-point reduction in the benchmark federal funds rate, setting the target range between 4.5% and 4.75%. This move sparked a significant surge in the cryptocurrency market, propelling Bitcoin [BTC] to an unprecedented peak of over $76,000. Once again, Bitcoin demonstrated its keen attention to the signals from the Federal Reserve, responding promptly with a remarkable rally in its value.
Fed Chair’s Response to Resignation Speculations
During the post-meeting conference, Federal Reserve Chair Jerome Powell addressed queries about his possible resignation following President Trump’s electoral win. When asked if he would resign at Trump’s request, Powell’s response was firm and concise: “No”. Furthermore, Powell emphasized that the election outcome would not influence the Fed’s upcoming policy decisions.
Challenges from Trump’s Criticism
Powell’s statements come in the midst of a tense relationship with President Trump, who has frequently criticized the Fed chair for his policies since Powell’s appointment in 2017. Trump’s discontent with Powell during his first term was evident, with accusations of not implementing monetary policy adjustments at the desired pace. Powell also clarified that the President does not possess the legal authority to remove or demote the Fed chair.
Trump’s economic agenda, marked by plans for aggressive tariffs, stricter immigration laws, and prolonged tax cuts, may contribute to increased inflation and higher long-term interest rates—a scenario that could push the Fed towards a reassessment of its future rate strategies.
Reactions in the Market Following FOMC’s Decision
The recent 25-basis-point rate cut signified the Fed’s second consecutive reduction, following a more substantial half-point cut in September. Upon the first rate cut in four years, the crypto market responded favorably, witnessing a surge across major digital assets.
Following this recent cut, history repeated itself as Bitcoin’s rally was mirrored by gains in other cryptocurrencies as well. Ethereum [ETH] saw an uptick of 8%, while Solana [SOL] experienced a 6.5% increase. Additionally, Cardano [ADA] posted significant gains of 11.1%.
The Fed’s Inflation Objective and Economic Outlook
Despite the political tensions, the Fed remains focused on its economic objectives. Recent reports have indicated that the inflation rate reached 2.1% in September, nearing the Fed’s stated 2% target. The Fed’s latest press release highlighted sustained economic growth and improved labor market conditions, despite a slight uptick in the unemployment rate.
The upcoming FOMC meeting, scheduled in 40 days, may witness further policy adjustments in response to evolving economic circumstances.