The Federal Reserve may cut interest rates if global trade tensions, energy supply issues, or relations with the Middle East worsen. Fed Governor Christopher Waller indicated that the Fed could consider lowering rates as inflation isn’t a significant threat, a move that, though unlikely, could positively impact Bitcoin prices. Past examples showed that emergency interest rate cuts typically follow economic shocks, such as the COVID-19 pandemic when Bitcoin and other risk assets recovered swiftly. The current geopolitical tensions, particularly in the Middle East, where 20% of global oil is transported, pose risks that could lead to economic slowdowns and rate cuts. If such cuts occur, the dollar may weaken further, increasing demand for Bitcoin as a hedge against inflation. The US Dollar Index has been dropping, suggesting further declines may lead investors to seek out Bitcoin. Observers note that if these conditions unfold, a rally in Bitcoin to $120K, while speculative, may not be out of reach.

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