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Goldman Sachs Sees Fed Delivering First Rate Cut in Q3 2024: Reuters
The Fed's benchmark interest-rate range is currently 5.25% to 5.5%.
Updated Mar 8, 2024, 6:29 p.m. Published Dec 11, 2023, 9:28 a.m.
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Investment banking giant Goldman Sachs brought forward its estimate for the Federal Reserve's first interest-rate cut to third-quarter 2024 from a previous forecast of the fourth quarter, Reuters reported Monday.
The shift comes as bitcoin [BTC] and the broader crypto market has surged in recent weeks on a bullish cocktail of an expected spot ETF launch in the U.S., the impending Bitcoin mining reward halving and the decline in the 10-year U.S. Treasury yield, the so-called risk-free rate.
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The Fed's benchmark interest rate is currently 5.25% to 5.5%, with traders of the Fed funds futures anticipating a decline to a range starting at 4% by the end of the next year.
When interest rates drop, borrowing becomes cheaper, spurring risk-taking in the economy and financial markets, including cryptocurrencies. The opposite happens when rates rise rapidly, as observed in 2022.
The Fed kicked off its tightening cycle in March 2022 to tame inflation, raising rates from as low as 0%-0.25% with the most recent increase occurring in July. The rapid rise in borrowing costs weighed on risk assets, including cryptocurrencies, last year.
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Small investors are buying bitcoin. For a rally to succeed, the whales need to join in.
Small wallets have increased their BTC holdings by 2.5% since October's all-time high while large holders trimmed 0.8%, Santiment data shows.
What to know:
- Bitcoin wallets holding less than 0.1 BTC have increased their share of supply to the highest since mid-2024 even as the price holds around the mid-$60,000s.
- Larger holders with 10 to 10,000 bitcoins — the whales and sharks that typically drive major moves — have reduced their positions since the October peak.
- The divergence supports choppy, fragile price action because retail demand alone cannot sustain rallies when big wallets are distributing into every recovery.
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