An increase in the Fed rate is considered bearish for the crypto market as it constrains the flow of funds into the market, while a rate cut is seen as bullish as it boosts risk appetite among investors.
Goldman Sachs, the second largest investment bank in the world, has predicted that the United States Federal Reserve could cut interest rates twice in the next two years, starting from as early as 3Q 2024. With the much-anticipated Bitcoin halving event expected in April, the crypto market could see a strong catalyst forming.
Interest rates have a strong correlation to investors’ risk appetite. Goldman Sachs earlier predicted the first Fed rate cut by December 2024; however, this forecast has been brought forward to the third quarter of 2024 due to cooling inflation, Reuters reported on Dec. 11.
The lender expects the two Fed cuts to bring interest rates to 4.875% by the end of 2024, compared to its previous forecast of 5.13%.
