TechFlow news — On July 12, according to CoinDesk, although the Federal Reserve's rate cuts may seem like a bullish signal for Bitcoin, the reality is not so straightforward. The inflation report released on Thursday could lay the groundwork for Fed rate cuts this year, and the crypto community widely believes this might trigger a Bitcoin bull run. However, market reactions depend heavily on the specific context behind any rate cut.
Markus Thielen, founder of 10x Research, said that if the Fed cuts rates in September 2024 solely due to easing inflation concerns, Bitcoin could see short-term bullish momentum. But if growth worries drive the cut—whether in September or later—Bitcoin may face significant selling pressure. Rate cuts during periods of low inflation and strong economic growth tend to boost asset prices more effectively, whereas cuts amid economic fragility could push investors toward safer assets. Historical data shows Bitcoin performs best when the Fed merely pauses its hiking cycle, while the first rate cut typically brings muted responses.
In addition, strategists at Wells Fargo Investment Institute noted that the start of a Fed rate-cutting cycle has often coincided with sharp stock market declines. Since 1974, equities have fallen an average of about 20% within 250 days following the Fed's first rate cut. This suggests cryptocurrency traders should remain alert to signs of U.S. economic weakness.
