Interest Rate Reductions Forecast

Experts anticipate a significant increase in Bitcoin’s price following interest rate cuts, especially after April, driven by the halving event.

There are a variety of viewpoints regarding the question of when the FED will begin reducing interest rates, which is still the subject of ongoing debate.

Goldman Sachs disagrees with the FED’s assessment that a first interest rate cut in March is unlikely and that all eyes are on May for the announcement.

At this time, economists from Goldman Sachs predicted in a recent report that four of the rate decreases will occur in the United States in 2024, with the first in June.

Recent forecast revisions by economists at Goldman Sachs concern when the Federal Reserve will reduce the rates.

In contrast to their initial projections of five of the rate cuts in 2024, economists now anticipate the first reduction in June.

Economists believe that even though the most recent inflation data for January is higher than anticipated, this should not be overly considered. According to economists’ forecasts, core inflation would decline to 2.5% by the FOMC meeting in May and 2.2% by June.

The most recent forecasts from Goldman Sachs economists are as follows: “We anticipate interest rate reductions in June, July, September, and December of 2024, in addition to four additional reductions in 2025.”

The likelihood of maintaining these rates unchanged in May is estimated at 76% by the CME Group’s FED Watch tool, whereas the possibility of a 25 basis point reduction is estimated at 23%.

Conversely, the likelihood that the FED will maintain current the rates in June is valued at 32%, whereas a 25 basis point reduction is valued at 53.7%.

Consistent with analysts’ anticipations, the FED maintained the rate between 5.25 and 5.50 percent in January, as you may recall.

Impact of Interest Rate Reductions on Bitcoin

As the FED begins to reduce these rates, an increase in Bitcoin and other cryptocurrencies is anticipated. Bitcoin peaked at $69,000 in November 2021, the same month that the FED began to raise interest rates.

As the subsequent bear market is directly correlated with interest rate hikes by the FED, it is hypothesized that a policy shift and interest rate reductions could restore Bitcoin to its former glory.

At this time, experts anticipate that the price of Bitcoin will increase substantially if interest rate reductions occur promptly following the halving.

According to experts, interest rate reductions following April are anticipated to propel the price of Bitcoin to a new peak, as the halving is expected to drive the cryptocurrency’s value past its all-time high of $69,000.