Goldman Sachs Anticipates Federal Reserve's Maiden Rate Cut in Q3 2024, Reports Reuters

Goldman Sachs, a major player in the world of investment banking, has adjusted its forecast for the Federal Reserve's initial interest-rate reduction. This alteration moves the anticipated cut to the third quarter of 2024, a shift from the earlier prediction of the fourth quarter, according to information from Reuters released on Monday.

This modification aligns with the recent upswing observed in both Bitcoin (BTC) and the broader cryptocurrency market. The optimistic momentum is fueled by the expectations surrounding the launch of a spot ETF in the United States, the imminent Bitcoin mining reward halving, and the decrease in the 10-year U.S. Treasury yield, commonly known as the risk-free rate.

Presently, the Federal Reserve's benchmark interest rate fluctuates between 5.25% and 5.5%. Traders in the Fed funds futures market are anticipating a decrease to a range beginning at 4% by the conclusion of the next year.

A reduction in interest rates typically results in more affordable borrowing, encouraging risk-taking behaviors in both the economy and financial markets, including the domain of cryptocurrencies. Conversely, a swift elevation in rates, as witnessed in 2022, has the opposite effect.

The Federal Reserve commenced its tightening cycle in March 2022 to counteract inflation, raising rates from the historically low range of 0%-0.25%. The most recent increase occurred in July of the same year. The rapid surge in borrowing costs exerted downward pressure on risk assets, cryptocurrencies included, throughout the preceding year.

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