The Federal Reserve cuts rates again, and Bitcoin hits new highs!
The US Federal Reserve announced on November 7 that it will cut rates again by 25 basis points (0.25 percentage points), lowering the target range for the federal funds rate to 4.5% to 4.75%. This follows a 50 basis point rate cut in September, marking another easing of monetary policy by the Federal Reserve. This policy has sparked positive reactions in the market, particularly stimulating the cryptocurrency market, with Bitcoin soaring to $76,900 on that day, setting a new historical high. Analysts predict that with the continuation of the Federal Reserve's easing policies, breaking through the $100,000 barrier for Bitcoin is not impossible.
Source: TradingView Bitcoin reached a new high of $76,900 after the Federal Reserve announced the interest rate cut.
On the same day, the Bank of England also followed suit with a 25 basis point rate cut, indicating that major global economies are gradually shifting towards easing policies in the face of slowing inflation and economic downturn risks. For risk assets, interest rate cuts usually stimulate capital inflow, boosting prices. Market observers noted that the interest rate cuts in the US and the UK will further open liquidity cycles, accelerating capital inflow into stock and cryptocurrency markets, driving assets like Bitcoin to new highs.
Powell emphasized: Sound economic policies are unaffected by elections, and he will not resign!
At the press conference following the policy meeting, Federal Reserve Chairman Powell faced media questions regarding whether he might resign due to political pressure, to which Powell succinctly replied, "No." When a reporter further asked if he was considering resigning at the request of President-elect Trump, Powell calmly stated that he would serve until the end of his term in 2026. This response was seen as Powell's commitment to the independence and policy stability of the Federal Reserve, also injecting confidence into the market.
Powell further pointed out that the current economic situation in the US is stable, and although the labor market has slowed somewhat, it remains healthy, with inflation gradually moving towards the 2% target. He emphasized that policy adjustments will take a gradually neutral stance to continue pushing towards the inflation target, and further policy adjustments will be made if necessary. Powell's firm stance and patient policy approach have led the market to believe that the Federal Reserve will not change its policy direction due to election results or political pressure.
Source: (New York Times) Powell responded to media inquiries about stepping down, stating that he will serve until the end of his term in 2026.
The US and Taiwan stock markets reacted positively, continuing the optimistic upward trend.
Following the announcement of the interest rate cut by the Federal Reserve, major US stock indices closed higher. The S&P 500 Index and the Nasdaq Index set new highs again that day, rising 0.74% and 1.51%, respectively. The Dow Jones Industrial Average fell slightly by 0.59 points, nearly flat. Technology and semiconductor stocks performed particularly well, with the Philadelphia Semiconductor Index soaring 2.27%, reflecting the market's positive expectations for the interest rate cut policy. Market analysts believe that as policies gradually loosen, lower borrowing costs will encourage investment, likely further boosting the stock market.
Driven by the US stock market, the Taiwan stock market also continued the optimistic atmosphere, opening today (the 8th) with a gap up, with the weighted index opening up nearly 200 points at 23,608.11 points and reaching as high as 23,683.06 points during the day. TSMC (2330) ADR surged 4.12% to $201.19, significantly boosting major electronic stocks. Major electronics stocks such as Foxconn, MediaTek, Quanta, Delta, and others all recorded varying degrees of gains, reflecting investors' confidence in the trends of the US stock market.
Interest rate cuts stimulate the cryptocurrency market, and investors are bullish on Bitcoin.
Since the results of the US presidential election were announced, the cryptocurrency market has shown a significant upward trend, especially Bitcoin, which surged significantly after the interest rate cut news, with a weekly increase of 8% and a cumulative increase of over 22% in the past month. Global investment firm VanEck predicts that if Bitcoin gradually becomes a global reserve asset, its price could reach $3 million by 2025. Market experts believe that the Federal Reserve's easing policies will help reduce borrowing costs, promoting capital flow into high-risk assets like stocks and cryptocurrencies.
On the other hand, Ethereum and Solana ($SOL) also rose due to the interest rate cut. According to CoinGecko data, Ethereum reached $2,900 on that day, a new high since August; Solana rose to $197, just $5 shy of its all-time high. Overall, the shift in US policy has provided significant incentives to the cryptocurrency market, with the market cap of cryptocurrencies starting to climb before the elections, growing 13% to $2.5 trillion to date.
Source: TradingView The total cryptocurrency market value has reached $2.5 trillion.
The market is watching the future policy direction, and the cryptocurrency bull market is poised to take off.
Analysts pointed out that in the Federal Reserve's policy statement from the November meeting, the assessment of economic risks appeared more cautious, not expressing "stronger confidence" that inflation would stabilize back to 2%. The Federal Reserve is currently adopting a "meeting-by-meeting assessment" policy stance, and will respond more flexibly to future economic data. Investment firm Janus Henderson analyst Dan Siluk stated that this change in wording shows the Federal Reserve maintains an open attitude toward policy adjustments, especially regarding whether inflation will continue to rise.
In this economic backdrop, the market generally expects the Federal Reserve to possibly cut rates again by another 25 basis points at the December meeting to continue stimulating economic growth. Noted cryptocurrency analyst Justin Bennett stated on platform X that if risk assets can weather the current interest rate cut cycle, Bitcoin may embark on its further bull market, challenging the historic high of $100,000. Such prospects not only inspire the cryptocurrency market but also fill many investors with anticipation for the future.
The Federal Reserve's latest interest rate cut has further invigorated the US financial markets and the global cryptocurrency market. In the context of a robust US labor market and gradually declining inflation, Powell emphasized the independence and stability of policies, while dismissing external pressure. The market expects this policy path to continue impacting high-risk assets, especially the prices of cryptocurrencies like Bitcoin. As the Federal Reserve moves towards a neutral policy stance, the bullish atmosphere in the cryptocurrency market is gradually forming.
[Disclaimer] The market carries risks, and investments should be made with caution. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Invest accordingly at your own risk.
