A global coordinated monetary ease campaign is underway

Most asset classes are on the rise as a result, but bitcoin remains under pressure

The crypto may need more than a handful of modest rate cuts before a new bull run can get started

What if bitcoin bulls were told that Western central banks had embarked on a new monetary easing campaign, the S&P 500 and Nasdaq – even with a mid-summer mini-panic – were tripping along very close to record highs, U.S. Treasury yields were falling to multi-year lows and gold was soaring to all-time levels? Is that something they might be interested in?

While it remains up in the air about whether the Federal Reserve will cut its benchmark lending rate by 25 or 50 basis points next week, it’s a certainty the U.S. central bank will embark on its first easing cycle since 2019. In this, the Fed will be joining other major Western central banks – the European Central Bank, the Bank of England and the Bank of Canada – all of whom have already cut interest rates, some more than once. While Japan hasn’t yet joined in and in fact has made the first initial steps towards tightening, its benchmark policy rate of 0.25% is only a few basis points above zero.

The reaction in traditional markets has been as expected, with stocks, bonds and the price of gold all sharply higher as a coordinated developed market monetary easing campaign began to manifest itself.

Bitcoin (BTC), though, hasn’t joined in the fun. Though putting in a nice rally on Friday, the price remains below $60,000 and roughly 20% below an all-time high above $73,500 set six months ago.

Bitcoin’s struggle

Zoom out, said one smart observer CoinDesk talked to, noting even with the major pullback since March, bitcoin remains higher by more than 40% year-to-date and 127% from year-ago levels. Much of bitcoin’s underperformance over the past few months might be nothing more than a breather after an outsized upside move. The crypto’s performance in 2024 and year-over-year remains far ahead of U.S. stocks and gold.

Still, zooming out even further might be frustrating to bulls. After all, bitcoin today is well lower than its level nearly three years ago when it touched what was then a record $69,000. Taking into account the speedy inflation in those three years, the performance looks even worse, particularly if bitcoiners would like the crypto to be known as an inflation hedge. The S&P 500 is higher by about 33% over that time frame and the barbarous relic gold is up more than 50%.

Steno Research noted that bitcoin hasn’t seen a whole lot of rate cutting cycles – really just the one that started in 2019. Bitcoin, the team said, actually declined about 15% between the time of the Fed’s first rate cut in August and the end of November, by which the Fed had trimmed by 75 basis points. It wasn’t until the massive Covid-era monetary push in March 2020 that bitcoin finally put in a bottom and began what became a meteoric rise.

It’s possible that a short, pedestrian series of rate cuts might do very little for bitcoin’s price and only larger, emergency-style central bank measures will be enough to spark a new bull run.