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Investors liked the Fed's 0.5% rate cut this week.
The S&P 500 hit an all-time high on Thursday and Bitcoin rallied 7% In the last seven days.
There's a good chance we'll see more cuts.
On Wednesday, the Fed's Open Market Committee said it was “considering Additional adjustments to the target range for the federal funds rate.
Translation: We won't stay at the newly set 4.75% to 5% level for long. There is a market giving 60% odds of seeing another 0.5% cut in November and 40% odds of getting a 0.25% cut.
Bitcoin rises when rates are low, as investors are encouraged to move their capital into assets with higher upside than bonds.
This is why cryptocurrencies, like stocks, are considered a “risk-on” asset. Indeed, in a widely distributed research note, BlackRock, the $10 trillion asset management firm that launched this year's wildly successful bitcoin ETF, used the term to talk about bitcoin.
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Moreover, the firm's analysts wrote that some investors view bitcoin as a “flight to safety” asset, meaning it can be a safe haven during geopolitical crises.
The notion that Bitcoin can perform the same function as gold is an old and debatable idea. Because of BlackRock's influence on the crypto market – its Bitcoin ETF sports approx $23 billion In possessions — that debate could reignite.
That would be a sideshow though. If rate cuts are what Mojo crypto investors desire, the last thing they want is a “flight to safety”.
They look forward to higher returns.
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