1. Decision to cut interest rates:
• On December 19, 2024, the FED announced an additional interest rate cut of 0.25%, bringing the interest rate range from 4.5%-4.75% down to 4.25%-4.5%.
• This is the third cut in 2024, with a total annual reduction of 1%.
2. Macroeconomic Impact:
• Higher than expected inflation: The FED raised its inflation forecast for 2025 from 2.1% to 2.5%, indicating the risk of inflation returning.
• Slower pace of interest rate cuts: The FED reduced the number of expected interest rate cuts in 2025 to just 2 times, disappointing investors and causing market concerns.
3. Controversial statements by Powell:
• Powell affirmed that the FED is not allowed to own Bitcoin and has no intention to change related laws.
• This statement caused turmoil in the crypto market, as investors lost confidence in the possibility of the U.S. creating a strategic Bitcoin reserve fund.
4. Market Impact:
• Bitcoin: The price of BTC sharply decreased from 104,800 USD to 100,000 USD, corresponding to a drop of 4.2%.
• Crypto market: Total market capitalization lost nearly 200 billion USD in 24 hours.
• Securities: The S&P 500 index fell sharply by 180 points to a level of 5,872.
5. Forecast and Recommendations:
• Macroeconomic impact: The FED's slower pace of interest rate cuts, along with rising inflation, will continue to negatively affect the global financial markets.
• Market trend: Investors should closely monitor the FED's policies and macroeconomic factors such as interest rates, import taxes, and borrowing costs in 2025.
The FED’s interest rate cut and Powell’s statements not only put pressure on Bitcoin but also made the global financial market more unstable. The rapid decline of BTC to 100,000 USD reflects investor anxiety in response to "hawkish" signals from the FED.