The Federal Reserve may consider cutting interest rates if geopolitical tensions, particularly in the Middle East, and global trade relationships worsen. Fed Governor Christopher Waller noted interest rates could be lowered soon, as inflation isn't a significant economic threat. Historically, emergency rate cuts occur after major disruptions, as seen in March 2020 due to COVID-19. Rising tensions in the Middle East, particularly regarding the Strait of Hormuz, could disrupt energy supplies, leading to economic uncertainties that might prompt rate cuts. Similarly, a deterioration in US trade relations could weaken demand, leading the Fed to ease rates to boost investment. Additionally, if the US Dollar Index weakens due to market reactions to rate cuts, Bitcoin could see increased demand as an inflation-resistant asset, making a rally to $120,000 feasible, especially given its strong correlation with stock markets during periods of economic growth.

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