TL;DR: For the first time in cryptocurrency history, the US Federal Reserve will cut interest rates by a quarter-point. It’s an auspicious marker for Bitcoiners simply because of the signal such a move might indicate about prospects for the broader economy. The ecosystem has only existed during a roaring decade-long bull run. Is all that about to change?

First Time in Bitcoin History, US Federal Reserve to Cut Interest Rates

The United States central bank, its Federal Reserve (Fed), announced, “In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 2 to 2-1/4 percent.” In recent weeks, President Trump has taken unusual steps for someone in his position, complaining loudly and pointedly about Fed rate hikes. The bank of last resort is supposedly independent, though the Chair is appointed by the president (as the current one, Jay Powell, was by Trump).

“What the Market wanted to hear from Jay Powell and the Federal Reserve,” Trump tweeted at the announcement, “was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world,” and even after that tepid praise, he lowered yet another boom on Powell, insisting the Fed Chair “As usual […] let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place – no inflation. We are winning anyway, but I am certainly not getting much help from the Federal Reserve!”

The mainstream economic contention is lower rates stimulate the economy, and statistics appear to confirm such a notion, popularized by mid-20th century English economist John Maynard Keynes. As Fed governors lessen the cost of borrowing money, more of it inevitably circulates, “prints,” and the battle between inflation and economic growth heats up … again, in theory. Trump blamed whatever creeping inflation on Powell and the Fed, however, as they began raising rates more aggressively during Trump’s term. They now appear to be reversing course.

The cut is notable for the outside world due to the last time, in 2008, The Fed monkeyed with rates toward the downward side — nothing less than the entire global economy was on fire. Some analysts are taking the current announcement as a similar foreboding: bad times are ahead. For Bitcoiners, it really depends on who is asked. Those of the hopeium variety, perma bulls, view any happening by definition as “good for Bitcoin.” A weakening dollar, potentially, could lure more traditional investors into crypto markets, though there is precious little evidence anything like that is really happening. The negative scenario, whereby another recession grips major economies, might cause a pullback from more speculative crypto plays and spell another crypto bear market in terms of fiat liquidity. Whatever the actual case, the top five cryptocurrencies by market capitalization were all up in positive territory immediately following the news.

DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.

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