The US Federal Reserve’s rate cuts are positive for risk-taking by investors and will boost sentiment towards Bitcoin and other cryptocurrencies, according to experts.
Lower interest rates usually help to spur an increase in demand for riskier assets, they say.
After the Fed cut US interest rates by 50 basis points on Wednesday, Bitcoin, the largest cryptocurrency, surged by more than 6 per cent, reaching an intraday high of $63,800 on Thursday. Bitcoin was trading at $63,066.81 at 10.35am UAE time on Saturday.
“Though the effects of the Fed rate cuts are uncertain, the sizeable impact on the global economy and in turn, the prices of digital assets, may lead to an increase in activity as lower borrowing costs and increased liquidity offer a promising landscape for digital assets,” says Richard Teng, chief executive of global crypto exchange Binance.
“Lower interest rates increase liquidity in the financial system, driving up demand for higher-yielding, riskier assets, including crypto. Additionally, lower rates can also stoke global inflation fears, prompting a potential increase in investors considering digital assets as an alternative store of value.
“Several indicators suggest that policy changes in September could also be well-timed for crypto investors.”
The US central bank's move was the first time it had lowered its benchmark lending rate since the Covid pandemic paralysed the economy more than four years ago. But its chairman Jerome Powell was careful to avoid committing to a similar pace going forward, saying moves would be guided by economic data.
Bitcoin has been trading within a relatively narrow range since setting a record high of almost $74,000 in March.
Hedge fund manager Anthony Scaramucci said in an interview earlier on Wednesday that he expected Bitcoin to reach new record highs fuelled by a combination of the interest rate cut and more regulatory clarity on the crypto industry from the US.
While the rate cuts typically have a positive impact on Bitcoin in the immediate future, midterm price movements will depend on the global macro environment, according to Stefan Kimmel, chief executive of crypto exchange M2.
“If a recession can be avoided, we would expect strong virtual assets. As long as there is uncertainty about gross domestic product growth and employment, volatility and drawdowns are to be expected,” he says. “The US elections in November are expected to provide another boost to markets due to reduced uncertainty.”
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, agrees, saying that the positive outlook for digital assets could be further boosted if Donald Trump returns to the White House in November.
Gabriel Debach, market analyst at trading platform eToro, says crypto traders have already locked up millions of dollars in Bitcoin options tied to the upcoming US elections.
“The election expiration options, with settlement expected four days after the elections, are gaining traction, with notional open interest of around $703 million, according to Deribit data,” Mr Debach says.
“In this context, Trump is emerging as a potential catalyst for the crypto market. The fact that he became the first former president to use Bitcoin for a recent transaction in New York is significant, and many see him as a driving force for the sector. His promise to turn America into the crypto capital has given new momentum to the Trump trade.”
With a rise of more than 45 per cent since the start of the year, supported by the approval by the Securities and Exchange Commission of the first spot exchange-traded fund in early January as well as its halving in mid-April, Bitcoin has since shown clear signs of fatigue, Mr Debach says.
Not surprisingly, from its all-time highs in mid-March, the leading crypto asset has seen a correction deepen until September 6, with a drawdown that had reached about 28 per cent, now reduced to 13 per cent, he says.
“The gold rally then led many to criticise Bitcoin, calling into question its title as ‘digital gold’. However, despite its scarcity (with a limited supply), it is important to remember that Bitcoin does not play the same role in investment portfolios as gold,” he says.
“Institutional investors do not allocate capital to Bitcoin for the same reasons they do with gold. If there is panic in the markets or the need to reduce leverage, crypto is often the first to be liquidated.”
Bitcoin’s dominance, which had been near year-to-date highs, is now declining. This suggests a renewed appetite for risk not only in Bitcoin but also in other crypto assets, Mr Debach adds.
On the contrary, Rifad Mahasneh, general manager for Middle East and North Africa at crypto exchange OKX, cites increased crypto adoption by institutional investors and even corporations allocating Bitcoin to their treasury funds.
“Our recent research shows that 70 per cent of institutional investors express interest in allocating towards Bitcoin within the next two to three years. Bitcoin's potential to protect against inflation and geopolitical risks can be appealing to investors,” he says.
“For sophisticated investors looking at long-term value and portfolio diversification, cryptocurrencies present a compelling option that's hard to ignore if you've taken the time to understand the technology and its potential. The market may need additional catalysts and ongoing education for people to fully understand the long-term potential of cryptocurrencies.”
Bitcoin's potential to protect against inflation and geopolitical risks can be appealing to investors
Rifad Mahasneh,
general manager for Middle East and North Africa, OKX
However, Antonio Di Giacomo, senior market analyst at XS.com, says the regulatory environment is limiting Bitcoin's long-term outlook.
“In recent months, authorities have intensified their scrutiny of cryptocurrencies, which could lead to new restrictions that negatively impact its price. Proposed regulations aim to control the use of cryptocurrencies in illicit activities and ensure greater transparency, but they could also discourage some institutional and retail investors,” he warns.
“Finally, there has been a noticeable decline in retail investor interest, which used to be a significant driver of the cryptocurrency market. Global economic turbulence and increased competition from more stable cryptocurrencies have created a more complex scenario for Bitcoin. Without strong retail demand, the cryptocurrency may struggle to maintain its current momentum despite the low-interest-rate environment.”
Euro 2020
Group A: Italy, Switzerland, Wales, Turkey
Group B: Belgium, Russia, Denmark, Finland
Group C: Netherlands, Ukraine, Austria,
Georgia/Kosovo/Belarus/North Macedonia
Group D: England, Croatia, Czech Republic,
Scotland/Israel/Norway/Serbia
Group E: Spain, Poland, Sweden,
N.Ireland/Bosnia/Slovakia/Ireland
Group F: Germany, France, Portugal,
Iceland/Romania/Bulgaria/Hungary
Sreesanth's India bowling career
Tests 27, Wickets 87, Average 37.59, Best 5-40
ODIs 53, Wickets 75, Average 33.44, Best 6-55
T20Is 10, Wickets 7, Average 41.14, Best 2-12
What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.
Desert Warrior
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5
MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports
The Africa Institute 101
Housed on the same site as the original Africa Hall, which first hosted an Arab-African Symposium in 1976, the newly renovated building will be home to a think tank and postgraduate studies hub (it will offer master’s and PhD programmes). The centre will focus on both the historical and contemporary links between Africa and the Gulf, and will serve as a meeting place for conferences, symposia, lectures, film screenings, plays, musical performances and more. In fact, today it is hosting a symposium – 5-plus-1: Rethinking Abstraction that will look at the six decades of Frank Bowling’s career, as well as those of his contemporaries that invested social, cultural and personal meaning into abstraction.
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
MATCH INFO
Barcelona 2
Suarez (10'), Messi (52')
Real Madrid 2
Ronaldo (14'), Bale (72')
More from Neighbourhood Watch:
The bio
Favourite book: The Alchemist by Paulo Coelho
Favourite travel destination: Maldives and south of France
Favourite pastime: Family and friends, meditation, discovering new cuisines
Favourite Movie: Joker (2019). I didn’t like it while I was watching it but then afterwards I loved it. I loved the psychology behind it.
Favourite Author: My father for sure
Favourite Artist: Damien Hurst
Mohammed bin Zayed Majlis
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
UAE%20ILT20
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Groom and Two Brides
Director: Elie Semaan
Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla
Rating: 3/5
The specs
Engine: 2.9-litre twin-turbo V6
Power: 540hp at 6,500rpm
Torque: 600Nm at 2,500rpm
Transmission: Eight-speed auto
Kerb weight: 1580kg
Price: From Dh750k
On sale: via special order
New UK refugee system
- A new “core protection” for refugees moving from permanent to a more basic, temporary protection
- Shortened leave to remain - refugees will receive 30 months instead of five years
- A longer path to settlement with no indefinite settled status until a refugee has spent 20 years in Britain
- To encourage refugees to integrate the government will encourage them to out of the core protection route wherever possible.
- Under core protection there will be no automatic right to family reunion
- Refugees will have a reduced right to public funds
