Bitcoin Rallies to $109K as Trump Sparks Fed Rate Cut Debate

Bitcoin climbed to $109,343 on July 9, up 0.8% in 24 hours, following former President Donald Trump's call for a 3% federal funds rate cut. In a Truth Social post at 10:00 a.m. ET, Trump argued the current rate is “at least 3 points too high,” claiming delayed action adds $360 billion annually in refinancing burdens. Bitcoin's price began rising within 30 minutes, as traders seemingly priced in the potential for looser monetary policy and increased liquidity.

Macro analysts at The Kobeissi Letter weighed in, noting U.S. interest payments have already hit $1.2 trillion over the past year. Trump’s estimate assumes $36 trillion in national debt, but only about $29 trillion is publicly held and sensitive to rate shifts. Under a more conservative scenario—300 basis points cut applied gradually with 20% of debt refinanced annually—analysts projected $174 billion in savings the first year, potentially reaching $2.5 trillion over five years.

However, such an aggressive cut would be unprecedented in a non-recessionary environment, especially with the U.S. economy growing at 3.8%. The Kobeissi Letter warned that a 300 bps cut could drive inflation above 5%, devalue the dollar by over 10%, and cause housing and commodity prices to surge. Gold could touch $5,000, oil could exceed $80, and the S&P 500 might rally past 7,000. But they cautioned these gains may prove short-lived without significant fiscal reforms.

For Bitcoin, the implications are bullish. A sharp drop in interest rates would act as monetary stimulus, likely accelerating flows into hard assets. Technical indicators show consolidation above $108,500, increased volume post-Trump's post, and tight Bollinger Bands signaling a breakout. Institutional accumulation remains steady, reinforcing upward momentum.