Debate over Rate Cut Size Sparks Market Volatility

• A 25 basis point Fed rate cut was expected, but a WSJ article questioned that assumption.
• Odds are now split between a 25 basis point and 50 basis point move.
• Bitcoin briefly rose on the news, but the gain was short-lived.
• The chances of a 50 basis point cut next week have increased to 45%.
• The news may have contributed to a turnaround in the US stock market.
• Analysts suggest that faster rate cuts by the Fed could negatively impact bitcoin prices.

Summary :
The likelihood of a 25 basis point rate cut by the U.S. Federal Reserve was previously high, but a recent Wall Street Journal article has questioned this assumption. The article suggests that the decision on the size of the rate cut is still up for debate, with some experts even advocating for a 50 basis point cut. Following the publication of the article, the chances of a 50 basis point cut next week have increased to over 40%. This news may have contributed to a turnaround in the U.S. stock market, which closed with gains after earlier losses. Bitcoin also experienced a temporary increase in value, reaching its highest point in over a week. While easier monetary policy is generally seen as positive for risk assets like bitcoin, some analysts believe that faster rate cuts by the Fed could further decrease bitcoin prices.

Sources :

- Coindesk