As expected, on December 18, 2024, the Federal Reserve lowered the key interest rate by 25 bps, the third consecutive reduction so far in 2024. However, this rate cut announcement cautioned us about additional reductions in the coming years. 

Fed Cuts Rates by 25 Basis Points

This decision has officially lowered the federal funds rate to 4.25% from 4.50%. While inflation remains slightly above the central bank’s target, it has significantly declined from the 40-year high reached during the pandemic peak.

Although the effects of this latest rate cut may not be immediately noticeable, it marks a critical step in what appears to be a broader effort by the Federal Reserve to continue reducing rates over time.

Despite this expectation of a rate cut, the overall cryptocurrency market remained declining ahead and following the FED announcement. Additionally, there is no sign of price recovery across the crypto market.

Will the Crypto Market Recover?

According to Coinmarketcap, the overall cryptocurrency market is down by 2.62%. In contrast, major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), XRP, and Solana (SOL) witnessed a price decline of over 2.65%, 2.30%, 4.69%, and 5.15% respectively in the past 24 hours.

Based on the historical data, the rate cut is undoubtedly favorable for the financial market, including cryptocurrency. However, Min Jung, the research analyst at Presto Labs cited that the upcoming rate cut would create the least impact on Bitcoin’s BTC price.

A few analysts further add that the recent rate cut may support the recent price decline to recover soon and gain losses.

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