Recently, the crypto market plummeted to its lowest point in five months. The global crypto market crash sent immense shockwaves to the digital asset world. The U.S. Federal Reserve (Fed) called an emergency meeting to address the global crypto market crash.
As a result of the market crash, the Japanese Yen dropped by 13%, and losses have neared 10%. Bitcoin has also suffered the same fate, with an 18% drop in the last five days. S&P futures have dropped by 4%.
Experts predict that the Fed will cut interest rates by 50 basis points to strike back the crisis. The host of CNBC, Ran Neuner, described the situation as critical and shared that the Fed’s swift action is crucial to prevent this financial meltdown, stopping scenarios that would be worse than the 2008 crisis from occurring.
Emergency rate cuts by the Fed are very rare and only take place during severe market disruptions. The chances of a September rate cut have grown to 100%, mirroring how bad the situation has become after the crypto market crash. During the 2007-2008 financial crisis, Fed rate cuts helped stabilise the housing market.
Addressing the swift responses by the Fed, Bitcoin critic Peter Schiff has warned that rate cuts can result in recession. Goldman Sachs has raised its recession probability from 15% to 25% for 2025. Despite the predictions, the economy is stable, leaving plenty of flexibility for the Fed.
Fed rate cuts are expected to have considerable impacts on crypto markets as lower interest rates have benefited Bitcoin by making traditional savings less attractive. Bitcoin may beconsidered safe against inflation and economic instability; it might draw more interest after Fed rate cuts.
