0.25 or 0.5 percent reduction in the interest rate of the Federal Reserve; Which one is better for the market?

study time: 2 minutes

The digital currency market is on the threshold of one of the most sensitive decisions of the Federal Reserve; Where the policymakers of this central bank have a difference of opinion about reducing the interest rate by 0.25 or 0.5 percent. The result of this decision can change the general trend of the cryptocurrency market in the coming months.

While inflation has eased and employment data has shown signs of weakness, some Fed members such as Chris Waller are calling for a 0.25% interest rate cut. On the other hand, Steven Miran, the new member of the Federal Reserve, believes that a 0.5% reduction is necessary to deal with the consequences of the trade war and tariff pressures between the United States and China.

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According to experts, the reduction in interest rates will increase liquidity, weaken the dollar and increase demand for alternative assets such as Bitcoin and Ethereum. In fact, in recent years, Bitcoin has been more prominent as a hedge against the decline in the value of fiat currencies.

In the event of a 0.25% reduction, the market will likely witness mild growth, but the decision to reduce the interest rate by 0.5% can cause a rapid influx of capital and an explosion of prices in the market; However, such a move may increase concerns about the weakness of the US economy. In general, the market is more dependent on monetary decisions than ever before.

Analysts also believe that the 4-year cycle of Bitcoin is no longer effective, and now global liquidity is the main factor in the formation of major market trends. If the Federal Reserve continues the path of monetary easing, many believe that Bitcoin’s next peak will be in 2026.