Bitcoin News Today: Fed Rate Decision Could Spark Bitcoin Surge to $140,000 on Eased Policy

The Federal Reserve’s upcoming interest rate decision is under close scrutiny, with market participants debating whether an unexpected rate cut could trigger a surge in Bitcoin to $140,000. Although the majority of investors anticipate the Fed will hold the benchmark rate steady at 4% during the July Federal Open Market Committee (FOMC) meeting, even a small reduction could shift capital away from fixed income and toward riskier assets, including Bitcoin [1].

The U.S. economy has shown resilience in recent months. The Bureau of Economic Analysis reported that the economy expanded at a 3% annualized rate in the second quarter, following a spike in imports before the Trump-era trade policies took full effect. Recession risks have also receded, with the probability of a 2025 downturn falling to 17% on the Polymarket prediction platform from a peak of 66% in May [1]. Inflationary pressures have further eased, with the June Producer Price Index (PPI) rising just 2.3% year-over-year, marking the lowest level since September 2024 [1].

Despite these favorable macroeconomic conditions, Fed Chair Jerome Powell has shown no signs of shifting course this week, according to reports from Yahoo Finance. U.S. President Trump, however, has repeatedly urged the central bank to cut rates, arguing that low inflation justifies reducing borrowing costs to boost economic activity and refinancing [1].

Bitcoin typically benefits from loose monetary policy. A reduction in the Fed funds rate could diminish the relative appeal of fixed income, drawing capital into higher-yielding assets. If the rate were to drop to 3.75% from 4%, investors may begin to shift away from the $25.4 trillion government and corporate bond markets, increasing demand for equities and cryptocurrencies [1]. Bitcoin’s performance is also closely tied to the growth of the money supply, particularly M2, which includes cash, savings accounts, and money market funds. As liquidity expands, both equities and Bitcoin tend to benefit, albeit with a lag.

A move to $140,000 would require a 19% increase from Bitcoin’s current price of approximately $117,600. This would result in a market capitalization of $2.78 trillion—still 87% below gold’s $22.5 trillion valuation. For comparison, the world’s most valuable company, Nvidia, commands a $4.36 trillion market cap, illustrating the substantial room Bitcoin has for growth [1].

Although the probability of a rate cut this week remains low, a surprise reduction could alter investor behavior. The S&P 500, already valued at $56.4 trillion, has limited room to absorb capital shifting from fixed income. In contrast, Bitcoin remains a compelling alternative for capital seeking high-growth potential in a more accommodative monetary environment.

The broader macroeconomic outlook suggests that a Fed pivot could create favorable conditions for risk assets. Analysts and traders continue to watch for any sign of policy easing, which could act as a catalyst for a new phase of Bitcoin’s bull market.

Source: [1] Fed Rate Decision Will Determine Direction of BTC Price (https://cointelegraph.com/news/fed-rate-decision-incoming-would-a-surprise-cut-send-bitcoin-to-dollar140k)