The crypto market rally resumed on Wednesday as a senior Federal Reserve official maintained his view that the bank should cut interest rates despite the rising inflation jitters.
Summary
- The crypto market rallied on Wednesday. Stephen Miran said that he supported interest rate cuts.
- He argued that the labor market was not strong and that inflation was largely contained.
- The rally also happened amid rumors that Iran had reached out to the United States.
Bitcoin (BTC) zoomed past the key resistance level at $72,000, leading to a broader rally among other altcoins. SPX6900 jumped by 20%, while Aerodrome Finance, Kite, Zcash, and Decred soared by over 10%. The market capitalization of all cryptocurrencies rose by 6.48%, while the futures open interest rose to over $95 billion.
Stephen Miran supports interest rate cuts
One major reason why the crypto rally is happening is that Stephen Miran, a top Fed official appointed by President Donald Trump, expressed his support for interest rate cuts despite the ongoing geopolitical tensions and higher crude oil prices.
Miran has always argued that inflation is still low and that the labor market was still under increased pressure. As such, he believes that cutting interest rates will be ideal to supercharge the economy. He said:
“When you look at the totality of labor-market data, there’s still evidence to me that it needs more support from monetary policy.”
Miran, however, is part of the bank’s minority in his support for more interest rate cuts. The most recent Fed minutes showed that some officials supported hiking rates in the last meeting, citing the elevated inflation, which has remained above the 2% target for over four years.
Inflation may remain above this range for longer as Trump plans to implement a new 15% universal tariff as soon as this week. Also, the ongoing war in Iran has pushed crude oil and natural gas prices to the highest level in months. Higher energy prices often lead to higher inflation because they are used in transport, manufacturing, and other activities.
Crypto market rally also triggered by hopes of talks between the US and Iran
The crypto market rally also happened as investors cheered a report saying that Iran had reached out to the United States for talks on how to end the ongoing war. Officials from the government’s intelligence office made the approach on Sunday, a day after the war started.
Still, it is unclear whether the two sides will meet soon to talk, as they are both confident of victory. Trump has insisted that the US was ready to fight the war as long as possible. He has also not ruled out a ground operation in the country. Similarly, Iran has maintained that it was prepared to continue fighting.
