Summary:
Elizabeth Warren urges the Fed for a 75-basis-point cut in interest rates.
Bitcoin's price rises amid expectations of rate cuts.
57% chance traders predict a 50-basis-point cut from the Fed.
Rate cuts generally seen as bullish for risk assets like Bitcoin.
Warren's stance shows some common ground with the crypto industry despite her skepticism.
Senator Warren's Push for Rate Cuts
Senator Elizabeth Warren is urging the Federal Reserve to implement significant interest rate cuts this week. The outspoken critic of cryptocurrency believes that high borrowing costs have been detrimental to the U.S. economy for too long.
In a recent letter addressed to Fed Chair Jerome Powell, which was also signed by Senators John Hickenlooper and Sheldon Whitehouse, Warren advocated for a 75-basis-point rate cut. Traders, however, anticipate a smaller adjustment, with expectations of a 0.25% or 0.5% cut from the current 23-year high.
As discussions around rate cuts intensify, Bitcoin's price saw a rise as traders reacted to expectations of a potential rate decrease. Recent analyses suggest a 57% chance for the Fed to lower rates by 50 basis points, up from just 25% a month ago according to the CME Group's FedWatch Tool.
Bullish Sentiment for Bitcoin
Rate cuts are generally viewed as bullish for risk assets, including stocks and cryptocurrencies. Warren and her colleagues are pushing for aggressive cuts, citing the deteriorating labor market and the need for rapid action as inflation shows signs of cooling. They highlighted a recent jobs data revision, indicating a loss of 818,000 positions, and an uptick in the unemployment rate to 4.2%—a stark contrast to last July's low of 3.5%.
The lawmakers argue that a cautious approach to rate cuts could jeopardize the economy, advocating instead for front-loading cuts to avert a potential crisis. They referenced Powell's previous comments indicating that the Fed does not welcome further cooling in labor market conditions.
Despite the Fed's initial cautious stance, some experts, including Wharton Business School Professor Jeremy Siegal, have recently called for an immediate 75-basis-point cut, suggesting that such a move could lead to a significant market rally.
Warren's Controversial Stance on Crypto
Warren is known for her skepticism towards the crypto industry, having called for stricter regulations and labeling crypto developers as “shadowy super-coders.” Despite her critical views, her advocacy for rate cuts aligns her with some interests in the crypto sector, at least in terms of favoring aggressive monetary policy.
As she faces opposition from crypto advocates like John Deaton, who is campaigning for her Senate seat, the push for a 75-basis-point cut may mark an unexpected moment of unity between Warren and the industry she often criticizes.
Edited by Andrew Hayward
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