Why a Fed Rate Cut Might Not Be the Bullish Signal Crypto Traders Expect
The post Why a Fed Rate Cut Might Not Be the Bullish Signal Crypto Traders Expect appeared on BitcoinEthereumNews.com. Expectations that the US Federal Reserve (Fed) will cut interest rates in September have been rising recently. While most forecasts interpret this as a positive sign for the stock and crypto markets, history tells a different story. Historically, Fed rate cuts often signal the beginning of economic recessions—a trend observed over multiple decades. A Fed Rate Cut Could Be a Sign of Recession A recent report from BeInCrypto revealed that the probability of a Fed rate cut in September 2025 has climbed above 90%. This is clearly what investors are hoping for. Analysts believe this optimistic sentiment will help sustain market momentum through 2025. Lower interest rates usually reduce borrowing costs. This encourages more investment in riskier assets like cryptocurrencies. However, past data show that major rate-cutting cycles occur just before or during economic recessions. Chart: Fed rate cuts and recessions. Source: WSJ Fed data indicates that major recessions in 2001, 2008, and 2020 all began with rate cuts. This historical pattern contradicts investor expectations and has prompted many retail investors to question its reasoning. “If rate cuts supposedly boost lending, why do the gray bars (recessions) show up after the Fed cuts rates?” investor John Smith asked on X. John Smith’s question appears valid, especially when considering the recent performance of tech stocks, which mirrors the dot-com bubble period. S&P 500 Technology Sector. Source: BarChart “Tech stocks are outperforming the S&P 500 by the largest margin since the peak of the Dot Com Bubble,” markets data provider Barchart commented. Guilherme Tavares, CEO of i3 Invest, also sees the S&P 500’s overheating as driven by AI hype. He voiced concern about investors planning to buy and hold for the long term. Fed Rate Cut Might Not Be Good News for Crypto Expert opinion helps answer John Smith’s earlier question. The…
The post Why a Fed Rate Cut Might Not Be the Bullish Signal Crypto Traders Expect appeared on BitcoinEthereumNews.com.
Expectations that the US Federal Reserve (Fed) will cut interest rates in September have been rising recently. While most forecasts interpret this as a positive sign for the stock and crypto markets, history tells a different story. Historically, Fed rate cuts often signal the beginning of economic recessions—a trend observed over multiple decades. A Fed Rate Cut Could Be a Sign of Recession A recent report from BeInCrypto revealed that the probability of a Fed rate cut in September 2025 has climbed above 90%. This is clearly what investors are hoping for. Analysts believe this optimistic sentiment will help sustain market momentum through 2025. Lower interest rates usually reduce borrowing costs. This encourages more investment in riskier assets like cryptocurrencies. However, past data show that major rate-cutting cycles occur just before or during economic recessions. Chart: Fed rate cuts and recessions. Source: WSJ Fed data indicates that major recessions in 2001, 2008, and 2020 all began with rate cuts. This historical pattern contradicts investor expectations and has prompted many retail investors to question its reasoning. “If rate cuts supposedly boost lending, why do the gray bars (recessions) show up after the Fed cuts rates?” investor John Smith asked on X. John Smith’s question appears valid, especially when considering the recent performance of tech stocks, which mirrors the dot-com bubble period. S&P 500 Technology Sector. Source: BarChart “Tech stocks are outperforming the S&P 500 by the largest margin since the peak of the Dot Com Bubble,” markets data provider Barchart commented. Guilherme Tavares, CEO of i3 Invest, also sees the S&P 500’s overheating as driven by AI hype. He voiced concern about investors planning to buy and hold for the long term. Fed Rate Cut Might Not Be Good News for Crypto Expert opinion helps answer John Smith’s earlier question. The…
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