How Bitcoin has historically reacted to Fed rate changes.

Bitcoin price dynamics after the change in the US lending rate since 2019 Bitcoin price after the change in the lending rate of the Federal Reserve Start 1 of 6 The importance of the Fed interest rate

US monetary policy assumes that the interest rate is the primary instrument for monitoring the health of the entire financial system. Any changes in the interest rate impact not only the banking sector but also the country's economy as a whole, the investment climate, and the stock and other trading markets, including the cryptocurrency market.

2 of 6 Fed rate cut in 2025

The September 2025 interest rate cut was the first since late 2024. The Fed decided to lower the rate by 25 basis points at its meeting on September 17. The price of Bitcoin at that point was around $117,000 and showed virtually no reaction.

3 of 6 Fed rate cuts in 2019

For the first time in Bitcoin history, the Federal Reserve's interest rate was lowered in mid-2019. US monetary authorities lowered it three times in a row from July to October 2019:

1. On July 31, by 25 bp.
2. On September 18, by 25 bp.
3. On October 30, by 25 bp.

4 of 6 Fed rate cuts in 2020

The Federal Reserve lowered the interest rate twice in March 2020. This period coincided with the onset of a severe economic crisis and the COVID pandemic:

1. On March 3, it was reduced by 50 bp.
2. On March 15, the decline was 100 bp.

5 of 6 Fed rate hikes in 2022 and 2023

Beginning in March 2022, the Federal Reserve began a multi-month process of raising its key interest rate. Through July 2023, the monetary authority, represented by the Federal Reserve, raised the rate at virtually every meeting.

6 of 6 Fed rate cut in 2024

Starting in September 2024, the Federal Reserve began cutting rates, lowering them for three consecutive meetings. Bitcoin's price was around $58,000 before the meeting began.

1. On September 18, by 50 bp.
2. November 7 by 25 bp
3. December 18 by 25 bp

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The Fed's rate decision is based on a combination of economic data, including inflation, unemployment, business activity indicators, and GDP. This means that the release of new economic data will influence the Fed's decision in the future, and any current forecasts may change.

Investors expect the rate to be cut five more times by the end of 2026, in 25 basis point increments, suggesting this is a positive trend in the long term. However, historically, Bitcoin prices have not shown a clear pattern between rate cuts and increases.

Since mid-2019, the price has been within a range of plus or minus 30% from the $9.5 thousand mark.

1. After the first decline, the local peak was at $12 thousand with a 25% increase.
2. After the second, the local bottom became the level of $7.4 thousand, with a 25% drop.
3. After the third, the price fell by almost 30%, to $6.6 thousand.

Since the beginning of March 2020, the price has hovered around $9,000 per Bitcoin.

1. After the initial decline, within a week and a half, quotes plummeted by 55% to $4,000.
2. The second decline in March coincided with a nearly unbroken rally in the leading cryptocurrency. Within a month and a half, the price had returned above $9,000.

Before the Fed began raising rates, the price of Bitcoin was around $38,000. It then plummeted by 60%, to nearly $15,000 in November 2022, when the rate was at 4%.

In July 2023, the increase was halted at 5.5%. Bitcoin's price had already risen to $29,500 at that point.

During this period, the price of Bitcoin rose above $100,000 for the first time, reaching around $107,000 by the end of 2024. The rise was more than 75% from September to its peak in December and coincided with Donald Trump's victory in the US presidential election in November 2024.

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RBC-Crypto does not provide investment advice; this material is published for informational purposes only. Cryptocurrency is a volatile asset that can lead to financial losses.

Source: cryptonews.net