Bitcoin, the largest cryptocurrency asset could see a significant rise in the coming months as Mike Novogratz, the Chief Executive Officer (CEO) of Galaxy Digital foresees BTC to benefit substantially from the anticipated Federal Reserve cut rates this year.
Fed Cut Rate, A Great Set Up For Bitcoin
The Federal Reserve has been indicating since December last year that it plans to lower its benchmark interest rate this year by the amount of three-quarter points, from the current range of 5.25 to 5.5%.
However, policymakers adopted language the following month indicating that they would maintain the policy rate in the current aforementioned range until they have “greater confidence” that inflation will reach the Fed’s target of 2%.
In 2024, the markets are pricing in two quarter-point rate cuts by the Fed and a 50% chance of a third, which is a significant reversal from the beginning of the year when six to seven cuts were anticipated.
Over the past several months, expectations concerning the extent and timing of the Fed’s rate reduction have rapidly changed. Investors are gradually losing faith in policymakers’ ability to reduce borrowing costs without inciting an inflationary resurgence in a robust economy.
Sharing his insights on the subject, Mike Novogratz voiced worry about the effects on the United States economy and several assets. Even though Novogratz cannot think of a single compelling reason why the Fed should lower rates, he is confident they will still go ahead with it.
Thus, he has stressed the urgent need for a politician who will take serious action and drastically reduce expenditure, drawing attention to Washington, DC’s glaring silence on the subject.
While Novogratz highlights that the development will pave a terrible setup for the US, he believes it will benefit several precious assets such as Bitcoin, Gold, and Silver.
The CEO’s summary of how a rate decrease will help Bitcoin and precious metals reflects a systematic approach to asset diversification and risk management in a monetary easing ecosystem. Those who prioritize Novogratz’s research may now view this as a favorable time to realign their portfolios and increase their holdings in assets that tend to gain from changes in monetary policy.
BTC Price Poised For Growth Amid Rate Reduction
Novogratz’s overview aligns with Lark Davis’, a popular cryptocurrency analyst insights, who also believes the event could impact the price of Bitcoin significantly, suggesting an optimistic year for the crypto asset.
Considering Goldman Sachs’s prediction on the terminal interest rates, Davis affirms that these cuts will improve market liquidity and motivate investors to invest more money in digital assets like Bitcoin, thereby propelling its price.
Goldman Sachs predicts there will be three rate reductions; the first is slated for June, and the range of terminal interest rates is expected to be between 3.25 and 3.5%.
Featured image from iStock, chart from Tradingview.com