Bitcoin Climbs as Trump Calls Fed Rates Excessively High
Bitcoin advanced on July 9, reaching $109,343 and posting a 0.8% gain over the previous 24 hours, following comments from former President Donald Trump urging a steep reduction in U.S. interest rates, according to technical insights from CoinDesk Research.
The rally began shortly after Trump posted on Truth Social at 10:00 a.m. ET, stating that the federal funds rate is “at least 3 points too high.” He argued that failing to lower rates by 300 basis points (3%) costs the U.S. economy $360 billion annually in refinancing expenses. Within 30 minutes of his remarks, Bitcoin started climbing as traders anticipated the possibility of easier monetary policy and increased market liquidity.
Analysts at The Kobeissi Letter took a closer look at Trump’s claims in a detailed thread on X. They noted that over the past year, the U.S. has paid $1.2 trillion in interest costs—an average of about $3.3 billion daily. While Trump suggested a $360 billion savings per percentage point based on $36 trillion of debt, Kobeissi pointed out that only around $29 trillion is publicly held and directly affected by interest rates. Using a more cautious estimate, they calculated that a 300 basis-point cut, phased in gradually, could save roughly $174 billion in the first year, potentially totaling $2.5 trillion in savings over five years if 20% of the debt were refinanced each year.
Despite the potential savings, The Kobeissi Letter warned that such a drastic cut would be unprecedented. Even during significant crises like 2008 or the emergency moves in March 2020, no single rate cut has exceeded 100 basis points. Implementing a 300 bps reduction while the economy grows at a healthy 3.8% rate would be historic.
They cautioned that cutting rates so aggressively could push inflation above 5%, weaken the U.S. dollar by more than 10%, and drive housing prices higher due to cheaper mortgages. In the near term, markets would likely rally, with gold potentially reaching $5,000 per ounce, oil topping $80 per barrel, and the S&P 500 possibly surpassing 7,000. However, they warned that without significant reductions in government spending, the long-term risks could be severe.
For Bitcoin, such a move would carry major implications. Lower interest rates are typically viewed as monetary stimulus, prompting investors to seek alternative stores of value like BTC as protection against inflation and currency devaluation. While the likelihood of such a large cut remains uncertain, Bitcoin’s swift price reaction suggests traders are already positioning for possible upside.
Technical Analysis Highlights:
- Bitcoin prices began climbing within half an hour of Trump’s Truth Social post.
- Prior to the comments, BTC was consolidating, but buying pressure increased noticeably afterward.
- The price tested resistance near $109,761 and maintained higher lows above $108,500, signaling bullish momentum.
- Bollinger Bands tightened to their narrowest levels in this market cycle, often a sign of an impending breakout.
- Trading volume concentrated around support levels between $108,500 and $108,600 hinted at institutional buying activity.
