Some experts see buying opportunities in the current decline, recalling historical rebounds after crises, such as in 2020 with Bitcoin.
Other experts are calling for urgent interest rate cuts from the Fed following a sharp drop in global financial markets and a disappointing employment report.
Jeremy Siegel and Nigel Green recommend immediate cuts to avoid a recession, calling for up to a 1.5% rate reduction this year.
Calling for Action
Jeremy Siegel, a finance professor at the Wharton School of the University of Pennsylvania, has urged the Fed to urgently reduce interest rates by 0.75%, followed by another 75 basis point reduction in September. According to Siegel, the current rate should be between 3.5% and 4%. He criticized the slowness of the Fed in adjusting rates, stating on CNBC:
If they are as slow to decrease as they were to increase, which, incidentally, was the first policy mistake in 50 years, then the economy is far from improving.
Nigel Green, of deVere Group, has also called for an immediate 0.25% reduction to avoid a recession, emphasizing that the Fed must “act now to avoid legitimate and widespread risks of a hard landing.”
Divergent Opinions
However, Matt Hougan, CIO of Bitwise, advocates for a more measured approach and deems an urgent rate cut unlikely. According to him, Fed Chairman Jerome Powell is cautious and the electoral context makes an emergency action improbable. He instead predicts a 0.50% reduction in September and over 1% by the end of the year.
Hougan has also expressed his optimistic view on the buying opportunities presented by this recent decline.
A Hope for Stabilization
Despite the current decline, some experts see this as an opportunity rather than a cause for panic. Hougan recalled the market crash inspired by COVID on March 12, 2020, where the price of Bitcoin dropped by nearly 40%, before rebounding over 1,000% the following year due to central bank measures.
Brian Rudick, senior strategist at GSR, stated that the Fed is ready to implement policies to achieve price stability and full employment. A rate cut between meetings could be positive for risk assets, including Bitcoin and other cryptocurrencies, demonstrating the Fed’s willingness to act and highlighting the positive correlation between the price of Bitcoin and global liquidity.
