Bank of England’s “Surprising” Rate Cut: Crypto Market 📉📉📉

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Bank of England’s “Surprising” Rate Cut: Crypto Market 📉📉📉

Bank of England’s “Surprising” Rate Cut: Crypto Market 📉📉📉

The Bank of England, in a move that could be described as a “surprising development” 😂, has reduced interest rates for the third time since August. This comes amidst the crypto market’s ongoing meltdown, with Bitcoin (BTC) and Ethereum (ETH) experiencing notable losses – much like a gambler’s chips after a night at the casino 🎲.

The BoE’s decision follows the Federal Reserve’s choice to keep rates unchanged, highlighting a divergence in monetary policy between these two economic giants. However, the BoE’s rate cut has sparked speculation about its impact on the already beleaguered crypto market. 😱

Bank of England Cuts Interest Rate to 4.5% 📉

According to Reuters, the BoE has reduced interest rates by a quarter point to 4.5%, marking the lowest level since June 2023. The Monetary Policy Committee forecasted that only two additional interest rate cuts would be necessary to curb inflation and return it to the target rate of 2%. 📊

Governor Andrew Bailey, in a move that could be described as a “careful approach” 🤔, alerted against further reductions in the interest rate.

It will be welcome news to many that we have been able to cut interest rates again. We’ll be monitoring the UK economy and global developments very closely and taking a gradual and careful approach to reducing rates further.

Central Bank’s “Careful” Approach To Monetary Policy

The Bank of England emphasized the need for a “careful” approach to potential future decisions. As the risks have now become two-sided, the committee stated, “There are uncertainties around the trajectories of both demand and supply in the economy that could have implications for monetary policy.” 🤔

As the central bank has adopted a hawkish stance, the community is less likely to invest in risky assets such as cryptocurrencies. If this leads to a panic sell-off, the crypto market could see further downturns. 😱

Federal Reserve’s Nuanced Stance on Interest Rates

Following the 2-day FOMC Meeting, the Federal Reserve decided to hold its interest rate unchanged at the 4.25% and 4.5% range. As per anticipations, the Fed is expected to maintain the rate steady for a larger part of the year.

The crypto market remained unaffected following the FOMC meeting and the Fed’s interest rate decisions. However, the industry collapsed shortly thereafter. The crypto crash was mainly driven by US President Donald Trump’s national emergency declaration, triggering a trade war. The President imposed heavy tariffs of 25% on Mexico and Canada as well as 10% on Chinese imports. 😩

Thus, it needs to be seen how the Bank of England’s interest rate decision will influence the crypto market.

How Will BoE’s Interest Rate Impact Crypto Market?

Currently, the crypto market is striving to recover from the recent turmoil while the Bank of England has introduced reduced interest rates. With a total market cap of $3.22 trillion, down 0.47%, the market is still in its bearish phase.

Bitcoin is trading below the significant $100k mark, marking a marginal increase of 0.11% over the last 24 hours. Priced a $98.7k, Bitcoin experienced a 5.91% loss over the past week and a 1.96% dip over the last month.

Meanwhile, Ethereum and XRP have exhibited declines of 14.45% and 21.7%, respectively, over the last seven days. Solana, BNB, and Dogecoin are also on the bearish trend, marking declines of 16%, 13%, and 22%, respectively.

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2025-02-06 17:37