Original title: "The Fed's big turn has begun, BTC has risen and fallen back"

Original source: Bitpush BitpushNews

On Wednesday afternoon local time, Federal Reserve Chairman Jerome Powell announced a 50 basis point cut in the benchmark interest rate to a range of 4.75% – 5.0%, marking the beginning of the loose monetary policy cycle in the United States.

In addition to announcing the first rate cut in more than four years, the latest FOMC forecasts show that the Fed will cut interest rates twice more in 2024, and most officials expect the central bank to cut interest rates by a total of 100 basis points this year. Interest rates are expected to fall further in 2025, with a forecast value of 3.4%, and long-term interest rates will bottom out at 2.9%. This usually helps stimulate the market, as traders tend to allocate risk assets on the prospect of a return to loose monetary policy.

Bitcoin data shows that Bitcoin quickly pulled up and pulled back during the session, soaring from the $60,000 support level to an intraday high of $61,357, and then returned to the support level near $60,000. As of press time, Bitcoin is trading at $60,231, with a 24-hour volatility of less than 1%. (BlockBeats Note: BTC has broken through $62,000 this morning and is temporarily reported at $62,286 as of press time)

The altcoin market reacted differently. Among the top 200 tokens, ZetaChain led the gains, up 20.6%, followed by Saga (SAGA) and Nervos Network (CKB), up 13.7% and 11%, respectively. KuCoin Token (KCS) led the decline, falling 6.1%, OriginTrail (TRAC) fell 5%, and Echelon Prime (PRIME) fell 4.3%.

The overall cryptocurrency market cap is currently $2.09 trillion, with Bitcoin's market share at 57.2%.

In traditional markets, U.S. stocks rose sharply after the announcement of the rate cut and then fell back. As of the close, the S&P, Dow Jones and Nasdaq indexes all fell, down 0.29%, 0.25% and 0.31% respectively. Spot gold broke through $2,600/ounce for the first time during Powell's press conference, and has since given up its gains. At press time, it was trading at $2,557.30/ounce, down 0.46% on the day.

Volatility is expected to increase further

"The Fed has met the market's needs with a larger 50 basis point rate cut," said Joel Kruger, market strategist at LMAX Group, in a report. "Now that the market has priced in such a degree of easing, the next concern will be whether the market can continue to be optimistic about risk assets under the Fed's easing policy in the future."

From a technical perspective, Secure Digital Markets analysts pointed out that BTC's attempt to break through $61,000 on Tuesday failed, and the price fell after Wall Street closed. The daily chart shows that the 100-day moving average has clearly seen a bearish rejection, and a low trend has continued over the past month.

Arthur Hayes, co-founder of BitMEX and chief investment officer of Maelstrom, also warned about the outlook for asset prices after the first rate cut in his Token2049 keynote speech, saying it could trigger a sharp drop in risky assets.

He said: "I think it's a huge mistake for the Fed to cut interest rates because the U.S. government is printing and spending the most money in peacetime, and while I think a lot of people are looking forward to a rate cut, which means they think the stock market and other things will add to the chaos, I think the market will collapse a few days after the Fed cuts."

While historically, liquidity easing cycles have favored BTC, Hayes warned that the move could exacerbate inflationary pressures and push up the yen (JPY), leading to widespread risk aversion. He said: "Cutting interest rates now is a mistake because inflation remains a long-term problem in the United States, driven primarily by government spending. Cheaper borrowing will only add fuel to the fire of inflation."

He also said that a potential rate cut could cause the market to fall because it would "narrow the interest rate gap between the dollar and the yen" (previously in early August, investors' large-scale liquidation of yen-based carry trades triggered a wave of crashes, and BTC once retreated to below $50,000).

Eamonn Gashier, founder and CEO of Block Scholes, also warned about the impact of the newly announced rate cut on the market and the yen carry trade.

"The 50 basis point rate cut suggests that the Fed is more concerned about deteriorating labor market conditions than a second inflation event, and further rate cuts will weaken the dollar and may lead to a small rise in JPY/USD. Although the Bank of Japan is expected to pause in rate hikes, a weaker dollar may lead to another unwinding of the yen carry trade and may have an impact on risk assets," Gashier said in a report.

He pointed out: "Given the correlation between Bitcoin and the US stock market since the launch of the Bitcoin ETF, the performance of the S&P 500 in past interest rate cut cycles can serve as a useful indicator of what to expect next. Historically, recession cycles triggered by a 50 basis point rate cut have all begun against the backdrop of widespread concerns about macroeconomic weakness, which has led to a long-term downturn in risk assets. However, the extent of the rate cut this time may be different and can be seen as the Fed taking additional measures to strengthen the labor market."

The 50 basis point rate cut brought a short-term boost to the market, but the market's expectations for the future economic outlook of the United States are severely divided. Some investors are optimistic about a soft landing of the economy, while others are wary of inflation and geopolitical risks. Therefore, in the short term, market trends may be more complex and changeable.

Original link

欢迎加入律动 BlockBeats 官方社群：

Telegram 订阅群：https://t.me/theblockbeats

Telegram 交流群：https://t.me/BlockBeats_App

Twitter 官方账号：https://twitter.com/BlockBeatsAsia