Bitcoin and top crypto prices, such as Pepe (PEPE), Cardano (ADA), and Hedera Hashgraph (HBAR), may surge as the US Dollar Index (DXY) plunges following a series of statements from Federal Reserve officials.
Fed Officials Raise Hopes of Interest Rate Cuts
The Federal Reserve met last week, and as was widely expected, decided to leave interest rates unchanged between 4.25% and 4.50%. Officials then maintained that they would be data-dependent when determining when to cut interest rates.
They did not wait for long, as a report two days later showed that the economy was doing worse than expected. It created just 73,000 jobs, and revisions showed that it averaged 35,000 jobs a month in May and June.
Fed officials are now openly starting to talk about interest rate cuts. In a statement today, August 6, Mary Daly, the head of the San Francisco Fed, said that the labor market called for policy adjustments. She said:
“The labor market has softened. And I would see additional slowing as unwelcome. All this means that we will likely need to adjust policy in the coming months.”
In a separate statement, Lisa Cook, a Fed Governor, said that the weak jobs numbers and the revisions were a turning point and hinted that she would be supportive of cuts.
Neel Kashkari of the Minneapolis Fed told CNBC that:
“The economy is slowing. In the near term, it may become appropriate to start adjusting the federal funds rate.”
Therefore, the market is betting that the Fed will cut interest rates in the upcoming meeting in September to prevent a further deterioration of the US economy.
The Secured Overnight Financing Rate (SOFR) points to three potential cuts this year, with odds of a September cut approaching 90%.
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Rate Cuts to Boost Altcoins Like Pepe, Cardano, and HBAR
Bitcoin and top altcoins rose after the Federal Reserve officials made these dovish statements. BTC rose to $114,000, while Pepe rose slightly to $0.00001050.
Cardano price rose to $0.7420, up from this month’s low of $0.6846. HBAR token rose to $0.2450 from $0.2275. Other top gainers included coins such as Pendle, Cronos, Bitcoin Cash, and DeXe.
A confirmation that the Fed will cut interest rates will be bullish for Bitcoin, altcoins, and risky assets like stocks. Low rates make the yield of government bonds lower and trigger demand for risky assets.
A good example of this is what happened in 2020 and 2021, when the bank slashed interest rates to combat inflation. At the time, Bitcoin and most altcoins surged by double or triple digits.
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