According to TechFlow, on July 12, CoinDesk reported that although the Fed’s rate cut seems to be a bullish signal for Bitcoin, the actual situation is not that simple. The inflation report released on Thursday may lay the foundation for the Fed to cut interest rates this year, and the cryptocurrency community generally believes that this will start the bull market for Bitcoin. However, the market reaction depends on the specific context of the rate cut.

Markus Thielen, founder of 10x Research, said that if the Fed cuts interest rates in September 2024 simply because of inflation concerns, Bitcoin may be bullish in the short term. However, if concerns about growth drive production cuts, Bitcoin may face huge selling pressure whether in September or later. If the rate cut occurs during a period of low inflation and economic prosperity, the stimulus to asset prices will be more obvious; if the rate cut occurs during a period of economic fragility, it may prompt investors to turn to safer assets. Historical data shows that Bitcoin has the largest increase when the Fed pauses its rate hike cycle, while the first rate cut usually reacts flatly.

In addition, Wells Fargo Investment Institute strategists said that the arrival of the Fed's rate cut cycle often coincides with a sharp drop in the stock market. Since 1974, the stock market has fallen by an average of about 20% within 250 days after the Fed's first rate cut. This means that cryptocurrency traders should be alert to signs of a weakening U.S. economy.