Good afternoon, my friends! Last night, the global market was waiting for Powell to release a positive signal at 10 pm!
Federal Reserve Chairman Powell released positive news of interest rate cuts at the Jackson Hole Conference, and the Bitcoin and crypto markets rebounded strongly!
According to OKX market data, at 22:00 last night, Bitcoin (BTC) briefly broke through 62,000 USDT and then adjusted slightly, and then within just 8 hours, it surged to 65,000 USDT, with a maximum increase of 6.9%. As of press time, BTC was at 63,918 USDT, with a 24-hour increase of 3.87%.
Not to be outdone, altcoins have emerged from the “Monkey Market” and have soared to break through the 2,800 USDT mark, with the highest increase reaching 6.3%.
Currently, ETH is trading at 2754.31 USDT, up 3.13% in 24 hours; SOL is trading at 153.5 USDT, up 6.29% in 24 hours; ORDI is trading at 35.43 USDT, up 10.7% in 24 hours; PEPE is trading at 0.000009 USDT, up 8.25% in 24 hours; PEOPLE is trading at 0.0677 USDT, up 12.09% in 24 hours.
The overall market rise has also driven a sharp rebound in the total market value of the crypto market. According to Coingecko data, the total market value of crypto has now rebounded to 2.35 trillion US dollars, a 24-hour increase of 3.5%.
In terms of derivatives trading, Coinglass data shows that the total amount of liquidation in the past 24 hours reached 181 million US dollars, of which the amount of short position liquidation dominated, reaching 139 million US dollars. BTC liquidation was 49.4047 million US dollars, and ETH liquidation was 47.8486 million US dollars.
Powell is about to speak, and US stocks opened higher across the board! The Dow Jones Industrial Average rose 0.41%, the S&P 500 climbed 0.57%, and the Nasdaq rose 0.8%. Coinbase took the lead in rising 1.03%, and MicroStrategy rose strongly by 1.7%, and market sentiment has clearly warmed up.
Fed Chairman Powell: The time has come for policy adjustments
The outbreak of this market trend is directly due to the dovish statement made by Federal Reserve Chairman Powell at the Jackson Hole Conference. Powell made it clear: "Now is the time to adjust policy. The direction of interest rate cuts has been locked in. We only need to wait for future data and risk balance to determine the timing and pace."
Although the market had previously expected a possible rate cut in September, Powell's first clear hint in public undoubtedly ignited the market's enthusiasm. The crypto market also swept away the haze, rebounded strongly, and ushered in a new wave of gains.
In fact, before Powell's speech, the market had high expectations for interest rate cuts.
Matrixport's latest weekly report points out that financial markets appear calm on the surface, but gold, oil, treasuries and the US dollar are approaching key support levels, suggesting that a major turning point is coming. This signal indicates that the macro economy may be about to usher in drastic fluctuations, although its impact may take months to fully manifest. Because financial markets are forward-looking, these changes may trigger more far-reaching trend reversals.
Fed's Bostic also said that the current policy has begun to show results and the Fed can begin to gradually restore its normal policy stance without having to wait until inflation falls back to 2% before making adjustments.
He stressed that the Fed needs to carefully evaluate changes in the labor market to ensure that policies return to normal in a smooth and orderly manner, and that the labor market is gradually returning to a more normal state. He also revealed that the Fed is "close" to cutting interest rates, and that the decline in inflation has exceeded expectations, so it is reasonable to adjust expectations for rate cuts in advance.
At the Jackson Hole conference, Bostic went further, saying that an early rate cut might be appropriate and hinted that multiple rate cuts could come this year. Before Powell’s speech, CME’s “FedWatch” data showed that the probability of the Fed cutting interest rates by 50 basis points by November was 54.2%, the probability of 75 basis points was 38.9%, and the probability of 100 basis points was 7.0%.
However, as Powell hinted at a policy shift, CME data showed a positive change in expectations for rate cuts, with the probability of a 50 basis point cut falling to 43%, while the probability of a 75 basis point cut rose to 45.2%, and the probability of a 100 basis point cut also rose to 11.8%. The swap market remained stable, with expectations that the Fed could cut rates by nearly 100 basis points by the end of the year. After Powell's speech, traders increased their bets on the Fed's rate cut.
Market expectations for the Fed to expand its interest rate cuts continue to rise, especially the probability of a cumulative interest rate cut of more than 75 basis points by November is rising. Many research institutions and media have expressed their views on this:
The Wall Street Journal revealed that Federal Reserve Chairman Powell has sent the strongest signal of a rate cut so far, indicating that the Fed intends to take action to prevent the U.S. labor market from further deteriorating. Peter Cardillo, chief market economist at Spartan Capital Securities, pointed out that Powell's speech was clearly dovish and expected the Fed to cut interest rates by 50 basis points in September and possibly twice this year.
Uto Shinohara, managing director and senior investment strategist at Mesirow, also said Powell's comments validated the market's expectations for a rate cut in September and continued to emphasize data dependence and assessment of future economic prospects.
He noted that the Federal Reserve may soon cut interest rates in sync with other major central banks, pushing the dollar lower. Current market expectations for a September rate cut are around 30 basis points, while expectations for full-year rate cuts have risen from 95 basis points to 100 basis points.
In addition, Fed official Harker made it clear that the Fed should start cutting interest rates immediately and continue to advance this process. Steve Englander, head of global foreign exchange research and macro strategy at Standard Chartered Bank, believes that a 50 basis point rate cut may not be the first step, but if the labor market continues to be weak, the Fed may quickly start cutting interest rates.
Former Federal Reserve economist Claudia Sahm emphasized in an interview that there are good reasons to support a 50 basis point rate cut, which will help the Fed "recalibrate" its policy and help stabilize the already low unemployment rate. International Monetary Fund (IMF) Chief Economist Gulan Sha also said that the Fed's upcoming rate cuts are highly consistent with the IMF's recommendations.
Although most institutions predict that the Federal Reserve will cut interest rates by 50 basis points in September, a few institutions hold different views.
For example, Stephen Stanley of Santander Bank pointed out that Powell emphasized the importance of the upcoming August employment data to monetary policy at the Jackson Hole conference, believing that the data is more critical than the August core CPI. Especially against the backdrop of weak employment growth in July, if the August data is strong, it may weaken the market's expectations for the Fed to cut interest rates by 50 basis points next month.
Economists at Bank of America said that despite Powell's dovish speech at the Jackson Hole conference, the Fed's focus on a cooling labor market could make a 25 basis point rate cut in September more likely than a 50 basis point cut unless the jobs report is extremely weak.
With Powell's speech, the market focus shifted from whether to cut interest rates to how many basis points to cut, which is a typical example of the financial market driving trends by building expectations. In the early hours of this morning, the overall rise of the crypto market was also driven by the new momentum of the expectation of a rate cut.
Whether the Fed will cut interest rates by 50 basis points or maintain it at 25 basis points depends on the August employment data released on September 6. The release time of this data may become the next key node for changes in the crypto market.
Rate cuts are a foregone conclusion, and the next narrative will focus on the US election
This year, there have been a series of events that have affected the crypto market, including the promotion of Bitcoin or Ethereum spot ETFs, and the Fed's interest rate cut expectations. However, for the rest of the year, perhaps only the US election, the final "market trigger point", has yet to be revealed.
According to data from Polymarket, the suspense of the US election is becoming increasingly tense. Trump and Harris are almost equally likely to win. At press time, Trump is temporarily leading with a slight advantage of 1%, but the competition between the two is still full of variables, which makes people wait and see.
Today, independent presidential candidate Robert F. Kennedy Jr. announced his withdrawal from the race and publicly expressed his support for former President Donald Trump.
He will suspend his campaign rather than end it and will remove his name from the ballot in 10 key states, a move that could add fuel to Trump's chances of winning, and Trump's cryptocurrency-friendly attitude has made him the most anticipated presidential candidate in the crypto industry.
Fundstrat co-founder Tom Lee told CNBC that Trump’s victory in the November election could boost asset prices, especially Bitcoin. Lee believes that the market’s expectations of Trump’s victory are higher than the polls and sees this as positive news.
Meanwhile, Bernstein Research released a report saying that the results of the US presidential election may have a profound impact on the cryptocurrency market, especially Bitcoin.
If Trump wins, it could trigger a bottoming out of Bitcoin prices and drive up prices of major cryptocurrencies. Bitcoin prices could bottom out only if the market anticipates a possible Trump win, as a Republican victory is seen as a positive for crypto policy.
However, if Kamala Harris wins, the crypto market could see prices slide as Trump loses the election and falls short of expectations.
However, TD Cowen analyst Jaret Seiberg pointed out in a report that the Harris administration may be more friendly to cryptocurrencies, even more favorable than the current Biden administration. Seiberg also predicted that the Harris administration may strengthen investor protection and retain the SEC's regulatory functions over tokens and trading platforms, and its policies may be slightly stricter than those of the Trump administration.
Regardless of who wins the election, the crypto industry’s gradual integration into mainstream finance is unstoppable. Perhaps from a historical perspective, 2024 will be an important milestone in the development of the crypto industry.
Okay, that’s all the information for this issue for now.
