Now the news and dynamics of the crypto market itself have almost no impact on the secondary market. Every larger fluctuation is caused by the release of important data in the United States.
The Fed's June interest rate decision did not cut interest rates, which was in line with expectations, and the dot plot showed that interest rates might be cut in November. The market rose significantly due to this news.
Later, Federal Reserve Chairman Powell spoke, but did not specify when to cut interest rates. He was playing Tai Chi again: we need to see more good data to boost confidence in the anti-inflation process, continue to pay close attention to inflation risks, and have not yet strengthened confidence that inflation will slow down enough to cut interest rates.
Then the market turned down.
Bitcoin and Ethereum are still at high levels. After the ETF is approved, Bitcoin essentially becomes a "U.S. stock" with global funds supporting it, but ETF funds will not buy altcoins. Excluding this factor, the crypto market may already be in a bear market, and many altcoins are already close to the bottom range of the bear market.
In this cycle, many projects incubated by institutions have a diluted market value of tens or even hundreds of billions of dollars when they go online, and then they are continuously cashed out, bleeding the market. From the data of stablecoins, there is no large-scale growth, so the continuous decline of altcoins is the trend.
Speaking of interest rate cuts, this is a major macro event that the entire market is looking forward to. Generally speaking, interest rate cuts will reduce capital costs, making companies more willing to expand, thereby increasing liquidity. However, this is only in theory and depends on the economic prosperity. If the economy is good, even if interest rates are raised, the stock market will still rise well. For example, the interest rate hikes from 2004 to 2006 led to a good rise in the US stock market. The interest rate hike in 2023 will also lead to a good rise in the US stock market, setting new historical highs.
If the economy is not good, liquidity will not necessarily increase even if interest rates are lowered. For example, in 2008, the Federal Reserve cut interest rates 10 times to zero, but U.S. stocks still plummeted by more than 50%. Since 2023, China's interest rates have also been loose, but the capital market has been in a severe winter.
For the market, the effect of directly expanding the balance sheet and printing money is immediate. For example, the Federal Reserve adopted unlimited quantitative easing (QE) at the end of 2008, and the Federal Reserve's "helicopter money" in 2020. The stock market immediately rebounded and entered a bull market.
So the key point is not whether the interest rate will be cut or not, but whether the economy will decline? Will the Fed actually print money directly to increase liquidity? This is the core factor.
Judging from the chart trend of US dollar liquidity, after the massive money injection during the epidemic in 2020, US dollar liquidity increased rapidly, and then the US stock market and crypto market went bullish; in early 2022, the Federal Reserve raised interest rates and shrank its balance sheet, liquidity decreased, and the US stock market and crypto market went bearish; in 2023, the Federal Reserve used financial tools to rescue the banking industry where panic spread after the bankruptcy of Silicon Valley Bank, US dollar liquidity stabilized, and the US stock market and crypto market went bullish again.
From the current perspective, after the Bitcoin ETF is approved, it seems difficult for the newly added inflow of funds and on-site funds to push up the second wave of rising prices, because a larger amount of funds is needed, and it is estimated that it will be difficult to be effective only by reducing interest rates. It is estimated that the next time will be to print money directly. $BTC#ZKsync空投争议 #ETH🔥🔥🔥🔥 #热门走势