Bitcoin Falls As Goldman Sachs CEO Says No Rate Cuts By US Fed in 2024
Bitcoin (BTC) has seen its price nosedive by 0.66% in the past 24 hours to $69,674.83. This price outlook comes at a time when David Solomon, the Chairman and Chief Executive Officer of Goldman Sachs predicted no further rate cuts by the Federal Reserve this year.
Bitcoin and Macro-economical Factors
Bitcoin, as a volatile asset, is also very sensitive to changes in the macroeconomy. The assertions by David Solomon echo the broad uncertainties that the global financial market seeks answers to. Whether or not the Federal Reserve will cut interest rates is debatable, however, the comments from David Solomon has offered some insights.
In the Goldman Sachs’ CEO’s opinion, the US economy has proven to be more resilient that envisaged. While speaking at an event at Boston College, Bloomberg reported that the banking expert predicted 0 cuts in 2024. The interest rate is the Fed’s desired economical tool to control money supply and by default, inflationary growth.
The aftermath of the COVID-19 pandemic forced many economies into a state of turmoil. While the United States was not exempted, the Feds lowered interest rates to combat inflation that rose as high as 8%. To correct this anomaly, the Feds had to start raising interest rates from the zero it left it as during the pandemic.
With the economy now recovering, the bank began hiking the interest rates as reported by Coingape. To David Solomon, the economy is balanced relatively and no data warrants the need for a rate cut. It is worth noting that leaving interest rates high favors banks, as they get to earn more on credit lines advanced to investors.
Per David Solomon, the investment in Artificial Intelligence (AI) and Government spending have helped cushion the impact of higher rates on the economy.
How Crypto Get to Benefit
The projections from David Solomon has a bearing on the risky asset ecosystem as traditional assets might continue to compete with Bitcoin in terms of yield. With higher rates, conservative investors may choose to stay with Treasury Bills and Bonds or other safer bets.
However, the retracement in the price of Bitcoin may be considered a knee jerk reaction. This is because the nascent asset class has bullish fundamentals that can drive its growth. From spot Bitcoin ETF to reduced supply following the past halving, BTC and by extension, altcoins are poised for imminent recovery in the short term.
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