Recent US employment data suggests a likely interest rate cut in December, according to Grayscale. This perspective could influence financial markets, particularly bitcoin, which could benefit from this more accommodating monetary policy. Here's what the numbers reveal.
FED: A further reduction in interest rates in sight?
According to Grayscale, recent US employment data points to a likely interest rate cut in December. In November, 227,000 new jobs were created, beating expectations of 220,000. However, the unemployment rate increased slightly to 4.2%, which could prompt the Federal Reserve to cut interest rates during its next meeting.
CME FedWatch, a forecasting tool, recently indicated a 74.5% probability that the FED will cut interest rates by 0.25% at its December 17-18 meeting. This forecast was reinforced by statements from Federal Reserve Governor Christopher Waller, who expressed support for a rate cut in December. Waller stated that monetary policy remains restrictive and that he expects rate cuts to continue next year until they reach a more neutral level.
Bitcoin, the big winner?
In general, lower interest rates tend to weaken the value of the dollar and benefit other currencies, including bitcoin. Despite a recent decline in BTC, Grayscale predicts that the crypto rally could extend into the new year.
Jamie Coutts, a crypto analyst at Real Vision, recently predicted that the Federal Reserve would increase the M2 money supply by approximately $20 trillion in 2025. According to him, this increase in liquidity could attract $2 trillion in capital into bitcoin markets.
In sum, US employment data and forecasts of interest rate cuts by the FED could have a significant impact on financial markets, particularly bitcoin. The meetings of December 17 and 18 are therefore eagerly awaited by investors.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
