The Fed cut interest rates again by 25 basis points, and bitcoin "rocket fuel" is ready.

According to the Financial Times, the Fed again announced a 25 basis point rate cut, and the interest rate range fell to 1.75% to 2%. Morgan Stan Capital co-founder Anthony Pompliano said that bitcoin "rocket fuel" is ready.

Due to a series of uncertainties triggered by the Trump administration's trade war, the Fed announced on Wednesday that it will cut interest rates for the second time this year in an effort to maintain economic growth. Federal Reserve Chairman Powell said that in the face of a severe economic downturn, the Fed is more likely to reconsider large-scale asset acquisitions and positive forward-looking guidance, rather than implementing negative interest rates.

Powell also said that the Fed must "examine" trade tensions. He reiterated that the Fed did not have a trade policy, but instead focused on supporting employment maximization and stabilizing prices.

Charles Schwab Managing Director Richard Flynn said that today's interest rate cuts should give the market a greater breathing space in the macroeconomic environment, which will still be affected by trade war uncertainty, Brexit and concerns about global economic growth.

However, he still doubts whether the interest rate cut is a panacea for restarting the economy. He believes that the US economic data has improved but inflation is still at or slightly below the target, the unemployment rate is falling, and wages are rising. The “uncertainty” facing the economy is mainly due to trade rather than high interest rates.

The Fed’s interest rate cut is a good news for the encryption industry in general. Because interest rate cuts are inflationary, this means they will reduce the purchasing power of legal tender. Therefore, there is a general consensus in the encryption market that the Fed’s monetary easing policy is good for Bitcoin.

Nonetheless, historical data suggests that bitcoin price movements are not directly related to the Fed’s rate hike or interest rate cuts. Although the price of Bitcoin hit a high in the year in June this year is considered to be related to the Fed’s rate cuts, the price response of Bitcoin was not obvious when the Fed announced a 25 basis point cut in July. In addition, between 2015 and 2017, the Fed raised interest rates several times, but the price of Bitcoin continued to rise and hit an all-time high of $20,000.

By Xiu MU

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