Bitcoin Price Starts Surging After Trump Says ‘Fed Rate’ Is 300 Basis Points Too High

Bitcoin’s price surged to $109,343 on July 9th, a 0.8% increase within 24 hours, according to CoinDesk Research. This rally followed a Truth Social post by Donald Trump advocating for a 300 basis point (3%) reduction in the U.S. federal funds rate. Trump argued this cut would alleviate a $360 billion annual burden on refinancing costs.

Within half an hour of this post, Bitcoin’s price began a steady climb, suggesting traders anticipated the potential short-term consequences of such a drastic policy shift. This included increased market liquidity and a risk-on sentiment.

The Kobeissi Letter, in a detailed X thread, analyzed Trump’s claim. While Trump’s calculation assumed savings of $360 billion per percentage point reduction across the $36 trillion national debt, only approximately $29 trillion is publicly held and subject to rate changes. The Kobeissi Letter revised the potential first-year savings from a 300 bps cut to roughly $174 billion, accumulating to approximately $2.5 trillion over five years, assuming 20% annual debt refinancing.

However, the analysis cautioned against the significant economic repercussions of such an unprecedented move. No single Fed rate cut in recent history has surpassed 100 basis points, even during the 2008 crisis or the 2020 emergency measures. A 300 bps cut in a growing economy (3.8% annual growth) would likely reignite inflation (above 5%), sharply devalue the U.S. dollar (potentially exceeding 10%), and inflate housing prices due to lower mortgage rates.

Short-term asset market rallies are anticipated, with gold potentially reaching $5,000, oil exceeding $80 per barrel, and the S&P 500 surpassing 7,000. The Kobeissi Letter emphasizes that long-term stability would necessitate substantial government spending cuts. For Bitcoin, a rate cut would likely stimulate capital inflows into hard assets and alternative stores of value, boosting its price. While the probability of such drastic cuts remains debated, the market’s immediate response suggests investors are positioning for potential upside.

CoinDesk’s technical analysis reveals a sharp price movement following Trump’s post. Increased buying volume followed initial consolidation. The price tested resistance near $109,761, with higher lows above $108,500, suggesting a bullish trend. Bollinger Bands reached their tightest levels in this cycle, often preceding a breakout. Institutional accumulation is evident near support zones around $108,500–$108,600.