Tonight is another day that will go down in history in financial history. The Fed's interest rate cut seems to be a foregone conclusion. People are no longer discussing whether to cut interest rates, but the extent of the cut.
Financial institutions such as Bank of America, Goldman Sachs, Morgan Stanley, Barclays and Citigroup have predicted that the Fed will cut interest rates by 25 basis points tonight, but a more radical rate cut is not impossible. CME's "Fed Watch" predicts that the probability of a 50 basis point rate cut in September is 61%.
So now the question for us is how the interest rate cut will affect the price of Bitcoin.
BlockBeats has sorted out some points of view worthy of attention for readers' reference. Wait and see tonight.
The environment is different from the past, and we are optimistic
Anthony Scaramucci, founder of hedge fund Sky Bridge
Anthony Scaramucci, founder of hedge fund Sky Bridge, said in an interview on Wednesday that the Federal Reserve may cut interest rates by 50 basis points tonight, which is part of a cumulative rate cut of at least 150 basis points in the next 18 months. He believes that this is good for asset prices in the United States and the world. Driven by a series of interest rate cuts by the Federal Reserve and clearer regulation of cryptocurrencies in the United States, Bitcoin will hit a record high of $100,000 by the end of the year.
Scaramucci said that some legislation supporting cryptocurrencies, Bitcoin and stablecoins will be passed in the early stages of the next U.S. Congress, which is bipartisan legislation supported by both Democrats and Republicans. At the same time, he is optimistic about the prospects for crypto rules under the Harris administration, as an adviser to his campaign team said Harris will support measures to help the industry develop while maintaining appropriate safeguards.
Zach Pandl, head of research at Grayscale Investments
Zach Pandl, head of research at Grayscale Investments, said in an interview with Forbes two weeks ago that "lowering interest rates in the context of a soft landing is quite unfavorable for the US dollar, but it is favorable for assets such as Bitcoin. Combining these factors, the market will explore historical highs again in the coming months."
But Zach Pandl also said that if the unemployment rate continues to rise and signs of layoffs begin to appear, "we may see a period of economic weakness during which many assets such as Bitcoin and technology stocks will also weaken in a typical cyclical manner." Zach Pandl believes that the recession period will be an excellent time to accumulate Bitcoin because the market is likely to see loose monetary policy and loose fiscal policy next, just as it happened during the epidemic. But if the US labor market continues to deteriorate and the US economy falls into a short recession, Bitcoin may face downside price risks. This is the main risk we face in the next 6 to 12 months.
Repeat the 2022 rate cut trend?
Jake Ostrovskis, OTC trader at Wintermute
Jake Ostrovskis, an OTC trader at market maker Wintermute, told Decrypt that the rate cut would mark a "turn" in monetary policy and believed that this could boost cryptocurrencies. "Historically, this move has increased liquidity in the financial system, which tends to favor risky assets such as Bitcoin," In other words, the more investors willing to take risks, the more money they are willing to invest in the field, which may lead to higher prices for digital assets.
CryptoSea founder Crypto Rover
CryptoSea founder Crypto Rover believes that the Federal Reserve is expected to cut interest rates by 50 basis points within 24 hours and is optimistic about the future development of Bitcoin. "The last time this happened, the bull market for Bitcoin began."
Wealth Mastery founder Lark Davis
Wealth Mastery founder Lark Davis also combined the trend of Bitcoin when the Federal Reserve cut interest rates in 2022 to predict the impact of this rate cut. "The last time the Fed cut interest rates, Bitcoin showed an upward parabolic trend. If history repeats itself, the next 6-12 months will be crazy."
Trader Ahmed@CryptoBheem
Trader Ahmed also believes that the interest rate cut will be beneficial to the rise of Bitcoin, but the realization process is more tortuous. He predicted that the market could experience sharp fluctuations in the case of a 50 basis point rate cut, and that after a 25 basis point rate cut, the market would experience a short-term decline before resuming its upward trend. "If (the Fed cuts interest rates) by 50 basis points, I will sell all (Bitcoins I hold)."
Altcoins will have room to rise
Arthur Hayes: The market will collapse before entering a bull market after a rate cut, and ETH will perform strongly in a rate cut cycle
BitMEX co-founder Arthur Hayes said during a keynote speech on "Thoughts on Macroeconomics Current Events" on the first day of the TOKEN2049 main venue:
It was a huge mistake for the Federal Reserve to cut interest rates when the U.S. government was spending the most money. The situation is more complicated when inflation exceeds their target and real GDP growth has exceeded 2% for about 8 to 9 quarters in the past. So, while I think a lot of people are looking forward to a rate cut, thinking that this will drive the stock market and other markets up, this is not actually the case. I think the market will collapse a few days after the interest rate adjustment because it will narrow the interest rate gap between the U.S. dollar and the yen.
I want to list some of the winners and losers from the decline in Treasury bond rates in the changing interest rate environment, as well as the interest income that can be generated by holding the safest legal assets. Winners include ENA, ETH, ETHFI and PENDLE, I personally hold a lot of these assets, but I don't hold ONDO. Maelstrom's (his family office) portfolio is very suitable for a falling interest rate environment.
A lot of people think that Ethereum has not made any progress at all in this round. Solana has performed very strongly in the bull market of the past few months. The main argument about Ethereum is that it is an Internet bond, an Internet bond with a yield of 4%. So why should I invest in this bond when the Treasury yield is above this level? But if the Treasury yield drops rapidly, then investing in ETH becomes profitable. The gains in Ethereum will exceed the gains in the US dollar and the gains in Treasury bonds. The Fed will cut rates, the market will collapse, and then reignite the bull market.
Trader Noodles
Trader Noodles believes that rate cuts usually increase liquidity in the market, and rate cuts will cause the US dollar to depreciate, causing the US dollar index (DXY) to fall. A depreciating dollar generally makes dollar-denominated assets more attractive. Investors' risk appetite may rise. Investors may turn to risky assets, such as stocks and cryptocurrencies, seeking higher returns.
But Noodles's view is more radical. He believes that "interest rate cuts -> US dollar index (DXY) falls -> risk appetite rises -> Bitcoin market dominance declines -> ETH/BTC rebounds -> altcoins rebound". When the market's interest in risky assets increases, investors may transfer funds from major cryptocurrencies such as Bitcoin to other assets, resulting in a decline in Bitcoin's share of the overall market. When funds flow to Ethereum and other mainstream altcoins, more funds in the market will also flow into other altcoins. As a result, the overall altcoin market may rebound, and the ETH/BTC trading pair will also rebound.
MN Consultancy founder Michaël van de Poppe
MN Consultancy founder Michaël van de Poppe believes that the Fed may first cut interest rates by 25-50 basis points. If this happens, Bitcoin will continue to rise to $65-68K. At the same time, the rate cut will also benefit DeFi and boost ETH's rise. Although ETH's icon looks bad now, after the rate cut, "ETH will do something."
