Bitcoin, Ethereum, Polkadot Volatile as Federal Reserve Implements Major Rate Cut

The price of Bitcoin experienced a decline following the Federal Reserve’s announcement of its first rate cut since the onset of the Covid pandemic, reducing borrowing rates by 0.5 percentage points, or 50 basis points.

The U.S. central bank adjusted the federal funds rate to a range of 4.75% to 5%. This significant reduction reflects mounting concerns about the health of the U.S. economy, which has led to increased volatility in various markets, including cryptocurrencies.

As of 16:40 ET (20:40 GMT), the price of Bitcoin remained stable, trading at $60,189.00. In comparison, Ethereum fell by 1.1%, trading at $2,138.87, while another cryptocurrency saw a decline of approximately 1.9%.

Stocks related to the cryptocurrency sector relinquished their earlier gains. While shares of MicroStrategy Inc. increased by 1.5% during the day, most Bitcoin mining companies, such as Marathon Digital Holdings Inc. and Riot Platforms, along with a leading crypto exchange, finished the day either flat or slightly lower.

The rate cut was revealed following the conclusion of the Fed’s two-day meeting and comes in the wake of a year marked by aggressive policy tightening aimed at managing inflation. During the last two meetings of 2024, ten out of 19 Fed officials expressed support for at least one additional cut of half a point.

Historically, rate cuts have led to a weakening of the U.S. dollar and have been advantageous for risk assets, including stocks.

Despite recent challenges, Bitcoin has struggled to maintain the gains it achieved earlier this year. After peaking at $65,000 in August, it has been trading around the $60,000 mark in the days following.