According to CoinDesk: A repeat of past financial events signals a bullish view for Bitcoin, with Federal Reserve officials hinting at putting a pause on rate hikes. This move is reminiscent of early 2019, when Bitcoin surged by more than 300% due to similar policy decisions by the Federal Reserve.
Since early 2022, the Federal Reserve has increased interest rates by 525 basis points to control inflation. This tightening cycle has hurt risk assets, including Bitcoin. But this week, key voices from the Federal Reserve — including Atlanta Fed Bank President Raphael Bostic, Minneapolis Fed President Neel Kashkari, Dallas Fed President Lorie Logan, and Fed Governor Christopher Waller — suggested that further rate hikes might not be necessary.
This dovish stance has grown market belief that the central bank's much-feared tightening cycle ended with the July's 25 basis point rate, and that the bank will now observe how the macroeconomic situation plays out in the coming months.
Commentators are drawing parallels with the previous rate cycle, which lasted for three years, peaked at 2.5% in December 2018, and stopped for seven months; in that period, Bitcoin rallied from its low to $13,880. The upcoming pause in the Fed's tightening cycle is coming several months ahead of the supposedly-bullish Bitcoin blockchain's mining reward halving, as it did four years ago.
Comparing the current macroeconomic climate to 2019 when the Federal Reserve paused its rate hikes and Bitcoin significantly surged in price, Markus Thielen, head of research and strategy, wrote in a client note that past data suggest an upside for Bitcoin. Although the crypto favors an upside, Bitcoin price might face initial weakness if the Fed pivots to rate cuts.
