The Fed Cutting Rates Has Ignited The Last Crypto Super Cycle

Following a long, drawn-out debate, the Fed finally opted for a 50 bps cut with a 10-1 vote. This could trigger the start of its highly anticipated easing cycle.

Check this chart:

Over the past couple of years, the FOMC continually hiked its rates. Now, it seems like the long overdue rate cuts are finally here.

So, what does all this mean, and how does it affect crypto?

How Does It Work?

The Fed plays a critical role in shaping not just the US economy but also the world’s financial systems. 

When the Fed lower rates, borrowing becomes cheaper, encouraging spending and investment. This helps the US economy but also impacts other countries. For instance, foreign investors may borrow dollars at lower rates and invest in countries with higher returns, boosting stock markets in these countries. Lower US rates can also reduce the cost of repaying dollar-denominated loans, benefiting companies in other countries.

However, there are downsides too. 

For example, a weaker US dollar due to rate cuts could harm export-based sectors like India’s IT industry, which earns much of its revenue in dollars. Additionally, lower rates can push up global commodity prices, including crude oil, which could drive inflation in countries that rely on oil imports, like India. 

So, while rate cuts can stimulate economic growth, they can also have ripple effects on global inflation and business revenue, making it a balancing act that impacts everyone, not just those in the US.

Fed Reserve Recent Movement

This move comes after aggressive rate hikes totaling 5.25 percentage points between 2022 and 2023, which were implemented to cool inflation, now down to 2.5% from a peak of over 9%.

With the labor market showing signs of softening, the Fed’s rate cut aims to prevent a larger economic slowdown. Lower borrowing costs should make it cheaper for businesses and consumers to access credit, helping to stimulate spending and potentially averting a recession, though achieving a "soft landing"—an economic slowdown without major job losses—remains a challenge.

For consumers, this rate cut will likely result in reduced costs for various types of loans, including mortgages, credit cards, and auto loans, though the impact will vary. Mortgage rates, which recently dropped from nearly 8% to 6.2%, could fall further if the Fed signals more cuts. 

However, rates on personal loans, credit cards, and auto loans, currently elevated, may not see dramatic declines. Savings account interest rates, which rose sharply during the Fed’s rate hikes, are also expected to drop, which could be a downside for savers. 

Meanwhile, stock markets are likely to respond positively in the long term to lower rates, as investors are encouraged to take on more risk when returns on safe assets like bonds decrease.

A Histoy Of Rate Cuts

Since 1988, the Federal Reserve has ended five rate-hiking cycles by cutting interest rates. These instances reflect varying impacts on the US stock market.

The historical data shows no consistent pattern in how the market responds after these cuts, as evidenced by the performance of the S&P 500 over the 750 trading days following each rate cut. 

Each of the five cycles saw significant variation in the S&P 500’s movements over periods ranging from three months to three years, with no clear correlation between the rate cuts and market trends

Are Rate Cuts Bullish For Crypto?

Fed rate cuts benefit riskier assets because lower interest rates reduce the cost of borrowing and increase liquidity in the market, which encourages investors to seek higher returns. Here's why:

• Cheaper borrowing: When interest rates are low, borrowing becomes cheaper for businesses and individuals, which can boost corporate profits, driving stock prices higher.

• Lower yields on safer assets: As interest rates fall, the returns on safer assets like bonds also decrease. Investors are more likely to shift their capital into riskier assets like stocks or crypto in search of higher returns.

• Increased liquidity: Rate cuts typically signal more liquidity in the financial system, which boosts overall market sentiment. Investors are more willing to take on risk when borrowing is cheap and economic conditions are favorable.

In simpler terms, riskier assets benefit because they offer higher potential returns, and lower interest rates make those risks more appealing relative to safer, lower-yielding options.

So, what are “risk” assets that will benefit the most from rate cuts? Below is a rough list of assets ranked in increasing order of risk.

Tl;Dr: Crypto, the riskiest asset, stands to gain the most from rate cuts.

How The Fed Rate Cut Will Shape The 2025 Bull Market

We’re entering what could be the most intriguing market since the 2020 bull cycle. The Fed’s recent rate cuts have already sparked a surge in crypto prices, with Bitcoin jumping from $56k to $64k in just a week. 

But the days of massive, sudden price jumps may be numbered as mainstream adoption and institutional integration, like ETFs, smooth out volatility.

This could be the last time we ever witness a crypto “super cycle.” With the stars aligned for a potential bull run in 2025, this might be your final opportunity to capitalize on the exponential gains that early adopters have enjoyed in the past.

However, there’s a challenge—the crypto market can feel overwhelming. New innovations appear constantly, and staying on top of them is no easy feat.

At Coiners, we believe that within these complexities lie untold opportunities.

That’s why on September 24, we’re hosting an exclusive workshop that offers a sneak peek into our Crypto Trading Masterclass. This event is designed to help you cut through the noise, make informed decisions, and position yourself for success in the coming bull run.

Why You Should Join Us:

• The Last Super Cycle? This could be the last chance to catch a bullish crypto market of this magnitude.

• Simplified Learning: We'll break down the complexities of trading and help you prepare for the market ahead.

• Find Your Tribe: Don’t go it alone—join a community of passionate, like-minded individuals who share your drive to succeed in crypto.

What’s Next?

Book your spot in the workshop and get ready to meet your Coiner tribe. 

Together, we’ll navigate this exciting market and prepare you for the 2025 bull run. The time to act is now—don’t miss out on what may be the last super cycle.