Has the Bull Cycle Been Canceled?

The Federal Reserve (FED) held a meeting that generated volatility in the cryptocurrency market. The decision itself, a 0.25% cut in interest rates, was already expected. However, the market reacted negatively to projections for the next cuts, raising doubts about the future of the risk asset market, including cryptocurrencies. The main concern lies in the persistence of inflation, which is expected to remain high until at least 2025, making it difficult to implement more aggressive interest rate cuts.

FED forecasts indicate that inflation should remain above the 2% target for one or two years. With interest rates already at a level considered "neutral", the room for further cuts becomes limited, as such actions could further intensify the inflationary scenario. This prospect of persistent inflation and limited interest rate cuts directly impacts risk assets, such as cryptocurrencies, which become less attractive in a scenario of economic caution.

Despite the challenging macroeconomic scenario, the possibility of a new altseason in 2025 still exists. The future of the crypto market will depend on the interaction between the global macroeconomy and American politics, especially with regard to the regulation of the sector. The market's attention is divided between macroeconomic challenges and possible political changes, such as Trump's inauguration and its regulatory implications.

Until Trump's inauguration, optimism may prevail, driven by positive news in the regulatory scenario.

After the inauguration, the focus will turn to the actions of the new administration and the fulfillment of campaign promises. If the promises are fulfilled, a new period of growth and euphoria in the crypto market may occur. However, the cycle of interest rate cuts, when it finally happens, should be more gradual and prolonged than initially expected.

Let's wait and see what happens in the next chapters...