The S&P 500 and Dow Jones Industrial Average (DOW) hit another record high as hopes of a soft landing grow as the U.S. rate-cutting cycle begins. Bitcoin once reached 63,850 yesterday, and Ethereum also swept away the decline, once approaching $2,500. Standard Chartered Bank believes that after the Federal Reserve decided to cut interest rates by 50 basis points, it is expected to continue to boost the rise of the broader digital asset market.
(The Fed cuts it by 2 yards! Inflation is closer to the target, and the focus turns to achieving a soft landing)
Interest rate cuts will boost digital asset trends
The U.S. Federal Reserve officially started its interest rate cutting cycle, lowering the federal benchmark interest rate by 2 percentage points to 4.75% to 5% in one breath, and it is expected that the benchmark interest rate will drop another 0.5% by the end of this year. Yesterday, the stock market, gold and cryptocurrencies all performed well driven by the capital market.
According to The Block, Geoff Kendrick, head of foreign exchange and digital asset research at Standard Chartered, said that regardless of the outcome of the U.S. presidential election in November, macroeconomic factors will drive digital asset prices higher.
Digital assets are leading the way in performance for the first time in a while following the FOMC meeting. Although today Polymarket shows Harris leading Trump 52/47.
Kendrick attributed the positive performance to macroeconomic drivers starting to outweigh election-related uncertainty.
Watch the Yield Curve and Bitcoin ETF Flows
While the U.S. election is important, macro drivers are starting to take over. Kendrick is monitoring the difference between short-term and long-term U.S. Treasury yields as an indicator of market conditions favorable to digital assets.
I look at the U.S. 2s10s curve, and the steep U.S. yield curve is good for digital assets.
The spread between the two Treasury yields has been negative since July 2022 (i.e., the yield on short-term bonds is higher than the yield on long-term bonds, a so-called "inversion"). The market took this to mean that a recession was coming. However, spreads started to turn positive again at the end of August.
(The inversion of the yield curve is coming to an end! Can it bring momentum to the rise of cryptocurrencies?)
Investment in Bitcoin spot ETFs may also increase support for Bitcoin prices.
Bitcoin set to reach new highs before year-end
Kendrick reiterated his previous prediction that Bitcoin will reach an all-time high before the end of the year, with a potential target of $125,000 if Trump wins and $75,000 if Harris wins.
This article Interest rate cut kick-starts the capital market, and Bitcoin will reach a new high by the end of the year. It first appeared on Chain News ABMedia.
