The Federal Reserve’s long-awaited move to ease interest rates has ignited a wave of optimism among crypto enthusiasts, particularly for Bitcoin and other digital assets. Economist and crypto analyst Alex Krüger, in a recent post on X, highlighted the Fed’s decision to cut rates by 50 basis points, with projections for further cuts in 2024. This balanced approach, according to Krüger, strikes a “sweet spot” by addressing concerns about the Fed lagging behind the curve while demonstrating control rather than reacting to market pressures.
Krüger anticipates a bullish trend for Bitcoin, although he acknowledges the upcoming US election could significantly influence its trajectory. He even proposes a daring strategy for altcoins: “For altcoins, go max long early in Election Night if Trump is coming up ahead in the counts. That’s my plan.” He emphasizes the robust state of the US economy as a crucial factor for risk assets, pointing to a historical trend: “Historically when the Fed begins its easing cycle with no recession, equities have rallied 10% in six months, while if the Fed begins the cycle in a recession, equities have fallen by 12%.”
The Fed’s decision has spurred excitement in the crypto market, with analysts predicting a rally for Bitcoin, Ethereum, and DeFi projects. However, Krüger cautions against excessive exuberance, noting that US equities are not undervalued and a return to negative interest rates is unlikely in the near future. He observes a divergence between market expectations and Fed projections for 2025, with the market indicating a 25% probability of a hard landing.
In conclusion, while the Fed’s easing cycle could fuel a surge in risk assets, including cryptocurrencies, investors should remain watchful of economic indicators and political developments that could shape market trends in the months ahead. The influence of Bitcoin as an institutional asset class will be explored further at Benzinga’s upcoming Future of Digital Assets event on November 19.
