The Federal Reserve may lower rates soon, and that could give Bitcoin a major price boost.
- The Fed is considering cutting interest rates as early as July.
- Weakening global trade and rising oil risks could push this decision.
- Bitcoin could rise sharply if the US dollar continues to drop.
Fed Officials Hint at Early Rate Cuts
On Friday, Federal Reserve Governor Christopher Waller said the US central bank might cut interest rates by next month. He explained that inflation is no longer a big threat. His comments suggest the Fed may act before its scheduled policy meeting on July 30. A sudden change like this would be rare, but not impossible. The last emergency rate cut was in 2020 during the COVID-19 outbreak.
Middle East Conflict and Trade Issues Add Pressure
Two big risks could force the Fed to act. One is rising tensions in the Middle East. The Strait of Hormuz moves about 20% of the world’s oil and gas. If conflict disrupts energy flows, prices could spike. That may slow the economy and give the Fed a reason to lower rates.
The second risk comes from global trade problems. If the US trade pact with China fails or deals with the EU fall apart, American exports could drop. That could weaken factories and other industries. A rate cut would help by making it cheaper for businesses to borrow and invest.
Bitcoin’s Price Linked to Economic Signals
Bitcoin often moves in the same direction as tech stocks. In recent months, it has shown a 70% price link to the Nasdaq 100 index. Investors see it as a risky asset with high growth potential. If the Fed cuts rates to help the economy, those same investors might buy more Bitcoin.
Weak Dollar Could Boost Bitcoin’s Appeal
Another key factor is the US Dollar Index (DXY). It has fallen from 104 in March to 99, close to a three-year low. If the Fed cuts rates soon, the dollar might drop more. A weaker dollar makes Bitcoin and other scarce digital assets more attractive to investors. That could help push Bitcoin’s price above $120,000, which some analysts say is possible.
Source: cointelegraph.com
