The Federal Reserve slashed interest rates by 50 basis points to 4.75%-5.0%, and predicted that further interest rate cuts may be possible before the end of the year, bringing the median benchmark interest rate to 4.4%. Although this policy usually helps boost market liquidity and promote a rebound in risk assets, the market is still skeptical about whether the rebound in cryptocurrencies can be sustained.
Bitcoin briefly rose to near $62,000, up 2.4%, while other major cryptocurrencies such as Solana (SOL), BNB, XRP and Cardano (ADA) also saw significant gains, with SOL leading the market with a 6% gain. Of particular note is Polymarket's bets that the market is optimistic that the Federal Reserve will continue to cut interest rates in the future, which further indicates traders' expectations for looser monetary policy.
However, market sentiment is not entirely positive. While interest rate cuts may provide a short-term boost, weak economic indicators and a complicated geopolitical environment have left investors uncertain about the longer-term trajectory. Chris Aruliah, institutional director at ByBit, mentioned that although interest rate cuts may bring about a short-term rebound in the crypto market, potential economic challenges still exist and investors should remain vigilant.
Although interest rate cuts can temporarily boost the market, in the long run, they may expose deep-seated problems in the global financial system and even cause the economy to become more depressed. The Fed's rate cut could be seen as a mistake amid high inflation.
Judging from market trends, the cryptocurrency market may rebound in the short term against the backdrop of interest rate cuts, but the sustainability of the rebound is constrained by concerns about economic growth and potential recession. In addition, market expectations for further interest rate cuts are strong, with Polymarket bets indicating a higher likelihood of a 100 basis point rate cut before the end of the year, which has also intensified short-term volatility in the crypto market.
I think that although the crypto market has rebounded due to the impact of interest rate cuts, there is still great uncertainty about the future trend. While traders enjoy the short-term rebound, they should remain highly vigilant about changes in economic fundamentals to deal with possible greater fluctuations.
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