The Federal Reserve has announced plans to slow the pace of interest rate cuts due to recent economic growth, sparking speculation about its potential effects on the cryptocurrency market.
In Asia, the crypto market experienced a slight price dip as trading commenced, but prices have since stabilized within the ongoing bull run, following recent rallies. This stabilization suggests that the market is positioned for further progressive growth in the near future.
In the U.S., Federal Reserve Chair Jerome Powell provided an update on the economy and inflation during a recent speech. Powell highlighted the nation’s economic growth and robust job market, which justify a slower rate of interest cuts. Speaking in Dallas on Thursday, he noted that inflation remains below 2%, signaling that the economy’s strength allows for a more cautious approach. Earlier in November, the Fed implemented its third interest rate cut of the year.
Historically, previous rate cuts have positively influenced crypto prices, with the latest cut in November playing a role in the so-called “Moonvember” rally. The announcement of a slower rate-cut cycle has raised questions about how this shift might impact the crypto market.
How Might the Crypto Market React to a Pause in Fed Rate Cuts?
Past trends suggest that Federal Reserve interest rate cuts often boost cryptocurrency prices, though there have been instances where they had little effect. A sustained cycle of rate cuts typically aligns with upward price momentum, especially during bullish trends. However, a slower pace of cuts could remove or delay a positive catalyst, requiring major cryptocurrencies to maintain their bullish trajectory without additional support.
Adding complexity to the landscape, several U.S. states recently filed complaints against the SEC, led by Chair Gary Gensler. Despite these developments and the recent minor price dip, the crypto market remains within a bullish phase. Altcoins like Ethereum and DOGE continue to capture market attention with notable price movements.
