#GoldmanSachs #USFederalReserve #InterestRateCuts #Bitcoin #MonetaryPolicy #Inflation #DigitalCurrency #CryptoInvestment
Goldman Sachs has revised its forecast to now expect two interest rate slashes by the U.S. Federal Reserve in the upcoming year. According to reports, this will begin as soon as the third quarter due to declining inflation. This impending shift in the monetary policy could create significant ripples on Bitcoin, popular for its ability to withstand economic instabilities. The anticipated reduction in the Federal Funds Rate to 4.875% by the end of 2024 from the prior forecast of 5.13% signals a more lenient monetary policy than predicted before. The U.S. labor market data remains strong, but the focus seems to be moving toward controlling inflation rates, triggering discussions of sooner-than-anticipated rate cuts.
Bitcoin’s reaction to these developments will be especially noteworthy, considering its historical varied response to interest rate changes. A year back, Bitcoin saw a notable 3.2% slump when the Fed hiked rates by 50 basis points, indicating its sensitivity to alterations in monetary policy. However, recent trends suggest Bitcoin displaying stronger resistance to such external forces, despite encountering threats from the looming 5% benchmark of the US10Y yield and the historically high US02Y yield. In October, Bitcoin impressively recovered, rising 46% to stabilize above the $40,000 mark after overcoming significant technical resistance around the $28,000 mark amidst tightening economic conditions. Now, as the market awaits the Fed’s rate cuts, Bitcoin’s unique position and performance suggest that its reaction might not strictly align with traditional financial theories, making this a potentially compelling phase for crypto investors and enthusiasts.
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