FOMC Rate Cut Could ‘Trigger’ Crypto Price Surge, Analyst Says

Today’s expected cut in the federal funds rate could “trigger” further gains in cryptocurrency prices as greater liquidity drives increased demand for riskier assets, according to Marc P. Bernegger, co-founder of crypto fund of funds AltAlpha Digital.

The Federal Open Market Committee’s announcement, which is expected to reveal a lowering of the target range for the federal funds rate, could easily serve as a bullish catalyst for digital currencies, Bernegger said in emailed comments.

“I expect a boost for cryptocurrency markets, particularly because lower interest rates tend to increase liquidity and make riskier assets like cryptocurrencies more attractive to investors,” he said.

“A rate cut could serve as a catalyst for a year-end recovery,” Bernegger added, providing some insight into what could happen in the coming months.

“The potential rate cut could pave the way for a cryptocurrency bull market, fueled by increased liquidity, lower borrowing costs and fairly supportive market sentiment,” he said.

Bullish Market Data

While Bernegger focused on how the anticipated rate cut could combine with broader market factors to fuel a meaningful move higher, another analyst focused on market data and what it says about investors.

“Judging by the activity in the Bitcoin perpetual futures market, it appears that traders are anticipating a price increase,” Julio Moreno, head of research at CryptoQuant, said via Telegram around 11pm EST last night.

The table below describes this activity:

“Inflows to bitcoin exchanges have remained at relatively low levels, indicating that traders are not rushing to deposit funds on exchanges to sell. We have yet to see activity tomorrow,” he added.

The table below illustrates this activity:

This morning he gave an updated view of the markets, noting that “everything looks pretty much the same as yesterday, only lower open interest signals that some long positions are being closed to take profits.”

Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, EOS, and SOL.