Bitcoin Bull Run Could Restart due to Surprise Fed rate Cut

The key takeaways

• Federal Reserve rates may be cut early in the event of a decline in global trade, energy or US relations with the Middle East.

• Bitcoin’s price could increase if the dollar weakens. 

Investors had widely expected the United States Federal Reserve to hold interest rates at 4.25%. Next monetary policy is set for the 30th of July, but if there are major disturbances in financial markets then it may be sooner.

Christopher Waller, Fed Governor, said this on Friday. “policymakers should be looking to lower interest rates as early as next month.” The Efforts of the During an interview Waller told CNBC that the Fed needs to start easing rates slowly. “inflation is not posing a major economic threat.”

Although the chances of this happening are extremely slim, the impact it could have on Bitcoin is worth considering.BTC( ) and which factors may cause the central bank’s cautious attitude to change.

Rate cuts could be forced by the US War in the Middle East and tensions over trade.

It is rare to see an emergency rate cut. These usually come after a financial shock, a change in geopolitical situation, or even a breakdown. financial stability. In March 2020 the Fed reduced rates 100 basis points as a reaction to COVID-19 spreading globally.

During the initial panic, investor sentiment dropped and gold fell to its lowest level in seven months. The long-term effect favored risky assets. The S&P 500 recouped its losses by late May 2020, while Bitcoin reclaimed the $8,800 level by late April 2020. It was less than 3 months before the panic had subsided.

Bitcoin is still a strong currency despite its adoption as a reserve by large corporations. correlated to tech stocks. The 30-day correlation between the Nasdaq and Bitcoin remained above 70% from March to May 2025. Investors view Bitcoins as high-beta plays on economic growth in the future.

A major macrorisk has reemerged in recent years: the rising tensions of the Middle East. Strait of Hormuz is responsible for 20% of worldwide gas and oil supply. Any interruption in the Strait increases energy prices and creates uncertainty. Businesses reduce operation under these conditions. As a result, the inflation expectation cools and hiring decreases. This creates room for monetary relaxation.

Another source of instability is trade. US exports may suffer if the temporary truce on tariffs between the US, China, and Canada collapses or key partners such as Canada, the EU, or other countries abandon the negotiations. The US Fed could cut rates to support investment and credit growth in order to counter the weakening of demand.

Related: Here’s what Bitcoin did while the US added to its $37T debt

Bitcoin appeal increases with weak dollar 

The federal debt is not increased by higher interest rates, but refinancing fees are. In the last quarter, investors have questioned whether inflation can be controlled. The yield of 20-year Treasury bonds has now risen to 4,9%. This is because the market wants a greater premium to signal uncertainty regarding Fed policy.

The US Dollar Index has been steadily rising. dropped to 99 The US dollar is nearing its lowest levels in the last three years. In the event that markets interpret an unexpected cut in US dollars as a sign of recession, then it could cause further weakness. The demand for assets that are resistant to inflation, such as Bitcoin, may increase sharply in this scenario. breakout above $120,000 Not only is it possible, but also increasingly logical.

The information contained in this article is meant to provide general knowledge and not as a legal or investment advisory. This article is solely for informational purposes. It does not represent or reflect Cointelegraph’s views.