Is the Federal Reserve lowering the interest rate on federal loans?
The cryptocurrency market is experiencing a surge, with Bitcoin and Ethereum prices on the rise, as investors anticipate a rate cut by the Federal Reserve.
According to the Federal Open Market Committee (Fed), the committee will meet on September 17th to decide the fate of the federal funds rate. The probability of a rate cut, as per CME Group, stands at 97.6%. If the rate cut materialises, it could lead to a significant rise in the prices of Bitcoin and Ethereum by the end of the year.
Bitcoin's price currently hovers around $110,000, after a temporary fall from a mid-August high of $124,457. Ethereum's price recently rose to around $4,500, after breaking out of a symmetrical triangle on its chart. If the breakout in Ethereum's price is confirmed, it could test the $5,000 US dollar mark and potentially reach a new all-time high.
The founder behind the upcoming Bitcoin project, Bitcoin Hyper, is Sergey Ivancheglo, co-founder of IOTA. Bitcoin Hyper aims to make transactions faster and cheaper, opening up new use cases like microtransactions, DeFi, gaming, and Web3 projects. The project is designed to eliminate the existing weaknesses of Bitcoin without compromising its security.
Bitcoin Hyper is building a Layer 2 blockchain that integrates the Solana Virtual Machine, allowing for real-time execution of smart contracts and decentralized applications. The Layer 2 structure of Bitcoin Hyper relieves the main Bitcoin blockchain, keeping it stable while providing the necessary flexibility for modern applications.
The weakening US labor market, with more unemployed people than job openings for the first time in four and a half years, increases the risk of a recession. However, a weakening labor market also increases liquidity and makes investors more likely to enter riskier markets like cryptocurrency. High interest rates encourage money to flow into safe investments like government bonds, while lower interest rates make investors more willing to take on risk.
Every trade in cryptocurrencies carries risk, and independent financial advice should always be sought. Conversely, if the Fed leaves rates unchanged, it could lead to a significant drop in cryptocurrency prices. A double interest rate cut by the Fed could act as a turbo for cryptocurrency prices, but the market remains volatile and unpredictable.
In July, there were 7.24 million unemployed people compared to 7.18 million job openings, highlighting the current state of the US labor market. Donald Trump has publicly pressured Fed Chair Jerome Powell to lower interest rates quickly to boost the US economy.
The expected rate cut by the Fed on September 17th could fuel a new rally in Bitcoin and Ethereum, but investors should remain cautious and make informed decisions based on their own research and financial advisors.
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