The crypto market rally resumed on Wednesday as a top Federal Reserve official reiterated his view that the bank should cut interest rates despite rising inflation.
Conclusion
- The crypto market rallied on Wednesday. Stephen Miran said he would favor a rate cut.
- He stated that the labor market is not strong and inflation has largely been contained.
- The march also took place at a time when rumors about Iran reaching the United States.
Bitcoin (BTC) broke through the key resistance level of $72,000, sparking a broad rally among other altcoins. The SPX6900 rose 20%, while Aerodrome Finance, Kite, Zcash and Decred rose more than 10%. The market capitalization of all cryptocurrencies increased by 6.48%, while the open interest of futures reached more than 95 billion dollars.
Stephen Miran supports interest rate cuts
One of the main reasons for the crypto rally is that Stephen Miran, the top Federal Reserve official appointed by President Donald Trump, expressed his support for interest rate cuts despite the ongoing geopolitical tensions and rising oil prices.
Miran has always argued that inflation is still low and the labor market is still under increasing pressure. Therefore, he believes that lowering interest rates would be the best way to boost the economy. He said:
“When you look at the labor market data set, there is still evidence to me that it needs monetary policy support.”
But Miran is part of a minority at the bank that supports further interest rate cuts. The Fed’s latest minutes showed that some officials backed higher rate hikes at the last meeting, citing rising inflation, which has remained above the 2% target for more than four years.
Inflation could remain above this range for a long time as Trump plans to implement a new universal tariff of 15% as early as this week. Also, the ongoing war in Iran has pushed the price of crude oil and natural gas to their highest levels in recent months. Higher electricity prices often lead to higher inflation because they are used in transportation, manufacturing, and other activities.
The rally in the crypto market was also triggered by the prospect of US-Iran talks
The crypto market rally also came as investors cheered a report that said Iran had reached out to the United States for talks on how to end the ongoing war. Government intelligence officials approached the country on Sunday, a day after the war began.
However, it is not clear whether the two sides will meet for talks anytime soon as both are confident of victory. Trump insisted that the US was ready to fight the war as long as possible. He also did not mention the possibility of a ground operation in the country. Similarly, Iran has declared that it is ready to continue the war.
