Preparing for a potential seismic shift in the value of Bitcoin and cryptocurrencies, estimated at a staggering $9.5 trillion, as the Federal Reserve takes action.
In recent developments, investors are showing a growing interest in Bitcoin and other cryptocurrencies, driven by the Federal Reserve's decision to lower interest rates.
According to reports, investors are betting on two more quarter-point cuts in October and December, potentially lowering the funds rate to between 3.5% and 3.75% by the end of the year. This expectation has sparked a shift in investment strategy, with institutional investors such as hedge funds, pension funds, family offices, and wealthy individual investors likely to move large amounts of capital from money market funds and high-yield savings accounts into higher-risk assets like Bitcoin and cryptocurrencies.
A $7 trillion 'wall of cash' could begin moving into these high-risk assets, as cash parked in money market funds and fixed income allocations are positioned to rotate into risk assets like bitcoin as yields compress. This shift could reinforce bitcoin's role as a liquidity barometer, as it has already been observed that the bitcoin price has climbed following the Fed's first interest rate cut of 2025.
The crypto market is braced for a collision with this $9.5 trillion 'wall of cash,' with the combined crypto market nearing its all-time high of $4.2 trillion. The bitcoin price touched $118,000 per bitcoin following the Fed's announcement, indicating a strong demand for digital assets in times of monetary easing.
However, not all news about Bitcoin is positive. Forbes recently reported that Bitcoin Suddenly On The Brink As 'Death Spiral' Price Crash Nightmare Is Coming True. The report suggests a potential price crash due to a vicious cycle of selling pressure and declining prices.
Despite this, market expectations for Bitcoin remain high, with Matt Mena, crypto research strategist at 21Shares, believing that this could create a powerful incentive for capital to move into equities and alternatives like crypto. More than $2 trillion is situated in fixed income ETFs, which are expected to seek higher returns now that the Fed has entered a cutting cycle.
This potential shift in capital could lead to a significant impact on the crypto market, potentially minting new 'Rockefellers or Rothschilds' in the process. As the Fed continues to ease, Bitcoin and the crypto market may continue to benefit, with continued easing at upcoming meetings potentially supporting bitcoin's momentum as global liquidity expands.
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