Key Takeaways
- The Fed cut rates by 50 basis points to 4.75%-5%.
- Bitcoin briefly surged to $61,000 before retracing.
- Crypto-related stocks, including Coinbase, rose after the cut.
The Federal Reserve reduced its key interest rate by 50 basis points to 4.75%-5%, marking its first rate cut in four years.
This follows a period of aggressive rate hikes aimed at curbing inflation. In a statement, the Fed noted:
The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent.
Further cuts
Fed members expect further cuts, with median rates projected to reach 4.4% by year-end.
Market response
Bitcoin responded by briefly rising 1.2% to $61,000 following the decision, though it later retraced slightly.
In U.S. equities, the Nasdaq climbed 0.8%, while the S&P 500 gained 0.6%.
Gold also surged 0.8%, reaching a record high of $2,600. Meanwhile, the U.S. dollar weakened 0.5%, with the dollar index (DXY) dropping to 100.3.
Crypto stocks
Market reactions extended to cryptocurrency-related stocks, with MicroStrategy rising 3.6%, while Coinbase and Galaxy Digital gained 2%-3%.
Bitcoin miners such as Marathon Digital and Riot Platforms also saw gains between 1.6% and 3%.
BitMEX co-founder Arthur Hayes warned that these rate cuts could trigger market instability, similar to the August sell-off.
Fed Chair Jerome Powell will provide further insights during a press conference later today.
