key takeaways:
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A surprising Federal Reserve Interest Rate reduction may reduce the appeal for a fixed income, pushing some capital towards a bitcoin -like property.
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Bitcoins benefit more liquidity and strong macro conditions from loose monetary policy that promotes risk of risk.
Bitcoin (BTC) can rally $ 140,000 if the United States Federal Reserve (Fed) makes a surprising cut below the current 4% level. While most market participants do not make any changes in rates for today’s Federal Open Market Committee (FOMC) policy meeting, even a small shortage can reduce returns on certain income, traders push traders to high-top up options and risk property is increasing.
Fed meeting comes between strong macro data and inflation reducing
According to the CME Fedwatch Tool, which calculates the interest rates contained from the US Treasury Note Pricing, the possibility of maintaining current levels is 97%. Is the situation unusual that the meeting is that macroeconomic data has been constantly strong – inflation has been cooled, the risks of recession have faded, and the growth is stable.
The US economy expanded 3% annual rate in the second quarter, based on the advance estimate of the Bureau of Economic Analysis. This growth increased after President Trump’s increase in imports ahead of the global trade war. Market spirit has moved rapidly: The possibility of an American recession in 2025 fell to 17% on the polymercate prediction platform below 66% of the summit in May.
Inflation pressure has also decreased. The manufacturer Price Index (PPI) of June was released on 16 July, increased by just 2.3% from a year ago, the lowest reading since September 2024. CNBC reported that US import tariffs are only making a slight impact on the economy and consumer prices. Nevertheless, Fed officials areware of potential downstream effects from business policy.
US President Trump has repeatedly criticized Fed’s monetary stance, calling Chairman Jerom Powell to cut rates without delay. “No inflation! Let people buy, and refinance your homes!” The President urged. According to Yahoo Finance, Pavel has not planned to change the course this week.
Bitcoin is beneficial from loose policy, but the supply of widespread money depends on the increase
For bitcoin investors, the relaxed monetary policy is generally helpful, although it rests on the benchmark rate of the fed. Risk-on assets money supply, especially are greatly affected by the increase of M2, including cash, savings accounts, deposits of deposit and money market funds. The M2 expansion is also affected by the US Treasury’s decision to issue loans.
A high liquidity environment benefits both S&P500 and bitcoin, although the effect is often gradual. The rate of 4% to 3.75% rate can remove investors from $ 25.4 trillion government and corporate bond markets. Even if inflation is less than 2.5%, the fixed income yield will be reduced, which will make the risk property more attractive.
The low interest rate also reduces the cost of lending for companies and homes, encouraging maximum profit over time. This promoted liquidity to economic activity and in turn, the desire for investors to take risks. Historically, bitcoin performs well during such stages, when more capital is available and the job market situation remains stable.
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At first glance, the price of $ 140k bitcoin may look ambitious, currently requires an increase of $ 117,600 to 19%. Although such a step will lead to a $ 2.78 trillion market capacity, the gold is still a discount of 87% for $ 22.5 trillion valuation. For perspective, NVIDIA (NVDA), now ordered the world’s most valuable company, $ 4.36 trillion market cap.
While the chances of cutting this Wednesday rate are low, bitcoin is one of the biggest beneficiaries when it happens. S&P 500, already the value of $ 56.4 trillion, has very little space to get out of fixed income from investors.
This article is for general information purposes and is not intention and should not be taken as legal or investment advice. The ideas, ideas and opinions expressed here are alone of the author and not necessarily reflected or represented the ideas and ideas of the components.
