Goldman Sachs Sees Fed Delivering First Rate Cut in Q3 2024: Reuters

Goldman Sachs has adjusted its estimate for the Federal Reserve’s first interest-rate cut to the third quarter of 2024, earlier than its previous prediction of the fourth quarter. This shift in forecast coincides with the recent surge in bitcoin and the broader cryptocurrency market, driven by factors such as the anticipated launch of a spot ETF in the US, the upcoming Bitcoin mining reward halving, and the decline in the 10-year US Treasury yield. Currently, the Fed’s benchmark interest rate stands at 5.25% to 5.5%, but futures traders expect a decrease to around 4% by the end of next year. Lower interest rates typically encourage borrowing and risk-taking, which can positively impact the economy and financial markets, including cryptocurrencies. Conversely, when rates rise rapidly, as seen in 2022, it can have a negative effect on risk assets like cryptocurrencies. The Fed began raising rates in March 2022 to combat inflation, leading to increased borrowing costs and weighing on risk assets, including cryptocurrencies, in the past year.