Bitcoin boom is at the horizon with the appealing Fed’s sugar high

Everybody is talking about incoming interest rate cuts by the Fed's and I was just talking about that with one of my crypto friends and questioning what will happen in this case. The likelihood result of this move is that it will drive people away from low-yield savings accounts and towards more promising investments like crypto and stocks. Some are feeling pretty optimistic that Bitcoin is about to have its Rocky Balboa moment in late 2024 and they don't have to wait for the promises for 2025. But I am quite reserved about it.

It is true that based on history when the Fed cuts rates, it's like they're sending a love letter to Bitcoin, inviting it to dance as investors look for better returns outside the traditional banking system. Lower interest rates often mean cheaper borrowing, which can lead to more money flowing into the markets. But the entire landscape is so much complex now and I am not sure we can base ourselves on primitive instincts like in the past.

The rate cuts also signal a shift towards a more accommodating monetary policy, making cash cheaper and less attractive to hold. With people looking to park their money in assets that might actually gain value, Bitcoin and its crypto cousins often emerge as the new darlings on the block. I want so much to have the optimism through which I have looked at crypto for so long, but I've learned my lesson not to be too excited about it. Patience proved to be the key of the game.

We can already see hype built around incoming changes, if confirmed.

QuoteArthur Hayes, co-founder of the cryptocurrency exchange BitMEX, predicts a significant uptick in cryptocurrency values following recent U.S. Federal Reserve rate cuts. These decisions, he suggests, mimic a short-term economic boost but could lead to long-term benefits for digital currencies like Bitcoin. [...]
Echoing his analysis, industry analysts concur that the Fed’s strategy might inadvertently act as a catalyst for Bitcoin and other cryptocurrencies. As the market braces for potential global financial shifts, Hayes underscores the importance of ready liquidity, which he believes will drive Bitcoin towards the $100,000 mark by year-end.

If we'll see a boom for Bitcoin fueled by the Fed's sugar high on cutting rates, it remains to be proven in the future. History supports that, but the landscape is evolving as well. I believe that we should have reasonable expectations about the expected yields and simply be grounded when investing. Also the investors are getting smarter, they gain experience, they learn from past mistakes, so the space is more challenging for every participant. And only those who understand this will be able to really grab significant yields.

Quoted source:
https://cryptocrunchapp.com/cryptocrunchnews/latest-arthur-hayes-predicts-bitcoin-boom-due-to-feds-sugar-high/

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