Key Takeaways

• BoE reduces interest rates to 4.5%, marking the third cut since August.
• The decision comes as the crypto market struggles amid significant losses.
• The Federal Reserve holds rates steady, highlighting a policy divergence.

Bank of England Lowers Interest Rates Amid Crypto Market Turmoil

In a surprising move, the Bank of England (BoE) has cut interest rates to 4.5%, marking its third reduction since August. This decision arrives at a critical time when the cryptocurrency market is grappling with heavy losses, with major coins like Bitcoin (BTC) and Ethereum (ETH) experiencing significant declines.

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The BoE’s latest rate cut diverges from the U.S. Federal Reserve’s stance, which recently decided to keep its rates unchanged. The Monetary Policy Committee (MPC) has hinted at a cautious approach, forecasting only two additional cuts to bring inflation down to the 2% target.

Governor Andrew Bailey’s Cautionary Statement

BoE Governor Andrew Bailey acknowledged the importance of the rate cut but emphasized a measured approach moving forward:

“It will be welcome news to many that we have been able to cut interest rates again. We’ll be monitoring the UK economy and global developments very closely and taking a gradual and careful approach to reducing rates further.”

The central bank has signaled that uncertainties in both demand and supply could affect future monetary policy decisions.

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How Does This Impact the Crypto Market?

The BoE’s cautious stance could spell trouble for high-risk assets like cryptocurrencies. Market experts believe that the rate cut could lead to panic sell-offs, further extending the bearish trend in the crypto space.

Currently, the global crypto market cap stands at $3.22 trillion, down 0.47%, as major digital assets remain under pressure:

• Bitcoin (BTC): Trading at $98.7K, showing a weekly loss of 5.91% and a monthly decline of 1.96%.
• Ethereum (ETH): Dropped 14.45% in the past seven days.
• XRP, Solana, BNB, and Dogecoin: Witnessing sharp declines of 21.7%, 16%, 13%, and 22%, respectively.

U.S. Federal Reserve Takes a Different Approach

Unlike the BoE, the Federal Reserve has decided to keep interest rates steady at 4.25%–4.5%, following its two-day FOMC meeting. Analysts predict the Fed will maintain this rate for the majority of the year.

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Interestingly, the crypto market initially remained stable after the Fed’s announcement, but soon after, it faced a major downturn. The crash was largely triggered by U.S. President Donald Trump’s national emergency declaration, which led to heightened trade tensions, including:

📉 A 25% tariff on Mexico and Canada
📉 A 10% tariff on Chinese imports

These economic uncertainties have added pressure to the already fragile crypto market.

What’s Next for Crypto?

As the BoE continues its cautious approach, crypto investors remain on edge. The rate cut could bring short-term relief, but long-term volatility remains a concern. With the global economy in flux and regulatory pressures mounting, it remains to be seen how the market will respond in the coming weeks.