👎👎 A decrease in interest rates by the Federal Reserve (FED) is usually a positive signal for Bitcoin. 👎

1. Decrease in interest rates → Flow of money into risky assets

• When the Federal Reserve cuts interest rates, the cost of borrowing money becomes lower.

• Investors are less attracted to 'safe' assets like bonds (low interest rates), so they look for riskier assets with higher returns such as:

• Technology stocks

• Yellow

• And Bitcoin

• Result: Flow of money into the cryptocurrency market → Price increase.

2. Inflation fears → Bitcoin is the 'digital gold'

• Low interest rates lead to an increase in the money supply and the risk of causing inflation.

• The supply of Bitcoin is limited (21 million Bitcoins) → becomes an 'inflation hedge' like gold.

• Many large investors see Bitcoin as a 'store of value' during times of currency depreciation.

3. Signals of monetary policy easing → Positive market sentiment

• Rate cuts imposed by the Federal Reserve are often accompanied by signals to support economic growth and reduce financial pressures.

• This increases optimism and enhances the appetite for risk, especially in the cryptocurrency space.

4. Bitcoin reacts strongly to expectations, not just actions

• Cryptocurrency markets often react before interest rates actually decrease.

• Hints from the Federal Reserve about cutting interest rates (cautious tone) → Bitcoin's price may rise sharply due to investor expectations.

A real-life example:

• During major interest rate cuts (2019, 2020, 2023), Bitcoin prices sharply increased in the following months.

• March 2020: The Federal Reserve cut interest rates to 0% → Bitcoin's price rose from about $5,000 to about $60,000 within a year.

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