Markets may yet see one more rate cut in 2024, if fed funds futures trading can be trusted. One more 25 basis point cut, as that data point is increasingly being predicted, could offer some notable positivity for U.S. investors ahead of the new year. One area that could benefit significantly from such a catalyst may be bitcoin, with its combination of geopolitical and tech-friendly factors appealing.
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Why might bitcoin benefit so much from a further rate cut? Its price tends to move in tandem with the money supply (M2), per CoinShares analysis. That may relate to bitcoin’s tendency to rise alongside tech, with tech set to benefit from greater credit availability. Tech rising overall can benefit bitcoin’s price, itself, as the currency is seen as a rising technology itself tied to the blockchain. What’s more, consumers seeing easier debt costs could also inspire those investors to move some assets into the blockchain in a fit of long-term optimism.
What Would Another Rate Cut Mean for Bitcoin?
Politically, a further rate cut could be the instigating factor to make fence-sitting bitcoin investors dive in. Many are likely watching for signs that the coming Trump administration’s crypto rhetoric will produce real changes. A rate cut could be the jumping-off point for investors looking to get into the space before the new administration’s policy changes spur a new “crypto spring.”
Investors have plenty of tools to play a potential rate cut and its impact on bitcoin. ETFs, for example, offer a strong contender therein. The Coinshares Valkyrie Bitcoin Fund (BRRR) provides exposure to bitcoin’s price for a 25 basis point fee. Launched earlier this year, the fund looks to track the spot price of bitcoin. BRRR owns bitcoin via a cold storage wallet. That method entails safeguarding private keys and storing the coins offline. The fund has returned 63.1% over the last three months, per ETF Database data.
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