The Federal Reserve’s latest rate decision has resulted in a 25 basis point cut, bringing the target range down to 4.5-4.75% in response to easing inflation and a softening labor market.

What's the scoop?

• Economic Support: Lower rates are expected to relieve pressure on the contracting private sector and support housing affordability.
• Increased Liquidity: The rate cut reduces borrowing costs, making it less expensive to borrow capital and, in turn, boosting liquidity across financial markets, which has strong, positive implications for crypto as a liquidity-driven asset class.

Bankless Take:

In line with expectations, today’s rate cut props open the floodgates a little further for liquidity, encouraging capital flow down the risk curve in return. For crypto, this environment is particularly favorable. Historically, Bitcoin and similar assets have thrived in periods of expanding liquidity, attracting investors seeking high returns amid low borrowing costs. With the Fed's focus on securing private sector resilience, especially as inflation subsides, crypto stands as the best-positioned asset class for more capital entering the system, both domestically and globally.

Source : Bankless News, Research and Analysis - Nov 7, 2024