Wells Fargo Predicts USD Weakness and Rate Cuts by 2025

Wells Fargo forecasts consistent US dollar decline with interest rate reductions occurring by 2025, impacting cryptocurrency markets globally.

This prediction may stimulate riskier investments as weaker dollar conditions historically benefit cryptocurrencies and foreign currencies.

Wells Fargo Sees Dollar Weakening, Rate Cuts by 2025

Wells Fargo analysts expect the US dollar to weaken further as interest rate cuts are projected for 2025. This aligns with slower economic growth forecasts and ongoing monetary policy adjustments. The Wells Fargo Economic Research Team has indicated that these developments are due in part to anticipated slower US economic growth and global challenges.

Cryptocurrency Surge Expected with Declining US Dollar

Such a decline in the US dollar typically boosts risk assets like Bitcoin and Ethereum. Investors often seek higher yields in cryptocurrencies when US monetary policies ease, affecting multiple market sectors. Global markets could see currencies in G10 and emerging markets strengthening against the US dollar. Historical patterns suggest increased investments in cryptocurrencies and decentralized finance (DeFi) platforms.

Fed Rate Cuts Historically Boost Crypto Markets

Past instances of Fed rate cuts, such as those in 2019 and during 2020, led to bullish trends in major cryptocurrencies. Risk appetite grows as the dollar index weakens. Based on historical trends, cryptocurrencies and DeFi tokens stand to gain. Continued Fed rate cuts may similarly encourage inflows into crypto markets, offering substantial rewards for strategic investors.

Charlie Scharf, CEO, Wells Fargo, “We now have the flexibility to proactively grow deposits and to allocate capital to grow loans and our corporate investment bank. We expect to be more aggressive in our pursuit of consumer and corporate deposits, and we will selectively look to grow loans, though we will be cautious during periods of economic uncertainty.”