The Federal Reserve has held interest rates steady at 4.25%, but a major disruption could prompt an early rate cut. US war in the Middle East tensions, trade risks, and a weakening dollar may force the central bank to ease monetary policy.
Fed Governor Christopher Waller suggested that policymakers should consider lowering interest rates as soon as next month, citing low inflation and potential for economic growth. However, such a move is still unlikely due to its rarity and sensitivity to global events.
The recent panic during the COVID-19 pandemic led to emergency rate cuts, but it’s essential to examine the potential impact on Bitcoin and other assets in this scenario. The US Dollar Index has dropped to 99, signaling weakness, which could boost demand for inflation-resistant assets like Bitcoin.
Rising tensions in the Middle East, trade risks, and a weakening dollar may increase energy costs and uncertainty, cooling inflation expectations. If the US exports suffer due to trade fragility or declining global growth, the Fed might resort to rate cuts to support credit expansion and investment. This could lead to an acceleration in Bitcoin price if investors seek safer assets amid economic uncertainty.
Investors continue to view Bitcoin as a high-beta play on future economic growth, despite its correlation with tech stocks remaining above 70%. The recent adoption of Bitcoin by major corporations has led to increased interest, but it’s essential to understand the risks involved.
Source: https://cointelegraph.com/news/bitcoin-rally-to-120k-possible-if-fed-eases-rates-due-to-tariff-and-war-impact