The post Potential Interest Rate Cuts and Increased Money Supply Could Influence Bitcoin’s Price Outlook appeared on BitcoinEthereumNews.com.

The recent analysis of the U.S. economy suggests that upcoming interest rate cuts by the Federal Reserve may positively impact Bitcoin’s price. This latest employment data reveals a complex interplay between strong job growth and rising unemployment, pointing towards increased potential for monetary easing. “Lower official interest rates tend to weigh on the value of the Dollar and benefit other currencies including Bitcoin,” stated Zach Pandl from Grayscale Investments. The U.S. job report signals potential Federal Reserve interest rate cuts, which could drive Bitcoin’s price higher, according to recent analyses. Federal Reserve’s Policy Shift and Its Implications for Bitcoin The recent jobs report has heightened expectations that the Federal Reserve may shift its monetary policy stance. On December 2, the CME FedWatch prediction tool revealed a 74.5% probability of a 0.25% interest rate cut during the Fed’s December meeting. Analysts emphasize that, historically, monetary easing tends to favor assets like Bitcoin, creating a more attractive environment for investors. Understanding the Economic Context: Jobs vs. Unemployment While the addition of 227,000 new jobs in November exceeded forecasts, the simultaneous rise in the unemployment rate to 4.2% indicates economic fragility. This paradox suggests that although the job market is expanding, wage pressures may be insufficient, prompting the Federal Reserve to consider rate cuts more seriously. The duality of strong job growth and increasing unemployment underscores uncertainty, making Bitcoin a compelling alternative investment. The M2 Money Supply and Its Relationship with Bitcoin Jamie Coutts, chief crypto analyst at Real Vision, has projected that the Federal Reserve may significantly increase the M2 Money Supply by $20 trillion by 2025. This expansion is crucial considering that Bitcoin has historically absorbed about 10% of new money supply introduced into the economy. As liquidity increases, analysts argue it could attract an estimated $2 trillion in capital into…

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Filed under: News - @ December 6, 2024 10:27 pm