The Fed is about to cut interest rates, how will the crypto market go? The cryptocurrency market is different now. It is no longer self-contained, but is increasingly closely related to macroeconomic fluctuations. This year, mainstream cryptocurrencies such as Bitcoin have been like a roller coaster, rising and falling with the ups and downs of the global market. Therefore, macroeconomic indicators have also become the focus of attention in the cryptocurrency market, especially the US federal funds rate, which has almost become a weather vane for the entire industry.
From March 2022 to July 2023, the Federal Reserve raised interest rates 11 times in a row, a total of 525 basis points, which is the largest interest rate hike cycle in nearly half a century. In this process, some banking institutions, such as Silicon Valley Bank and First Republic Bank of the United States, have encountered liquidity crises. The crypto market has not been spared, such as the collapse of FTX. Although it has many problems of its own, the liquidity tension caused by macro tightening is also the last straw that broke it.
By this year, although cryptocurrencies have gained some respite through ETFs, the weakening liquidity still shrouds the market in the shadow of a bear market. However, with the September FOMC meeting approaching, the market seems to see hope. After a year of high interest rates, the macro market may finally see a turnaround.