Bitcoin hasn’t been rallying like everyone expected despite the Fed hinting at cutting interest rates. Arthur Hayes, the co-founder of BitMEX, thinks he knows why.
The Fed’s Plan: Lower Rates, Higher Bitcoin?
When the Fed lowers interest rates, it usually means investors move their money from safer investments like government bonds to riskier assets like stocks and crypto. This should lead to higher prices for those assets. But Bitcoin is actually down since the Fed’s announcement.
The Unexpected Twist: A Hidden Money Magnet
Hayes says the money isn’t going to Bitcoin. Instead, it’s flowing into a lesser-known program called the Reverse Repo Facility (RRP). This program basically allows banks to park their money with the Fed and earn a higher return than they would with government bonds.
Bitcoin’s Uncertain Future
With the RRP offering a higher return, investors are choosing to leave their money there, leaving Bitcoin in the dust. Hayes predicts that Bitcoin’s price could continue to drop until the Fed actually cuts rates.
In short, the Fed’s rate cut might not be the boost Bitcoin needs. Until the Fed makes its move, Bitcoin could be stuck in a holding pattern.
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