According to historical speculation, interest rate cuts are usually accompanied by a bull market after a big drop❗
Only one soft landing has been achieved since the 1980s.
This happens when the job market is improving and unemployment is falling.
This time the labor market is a little bit...
The U.S. central bank cut interest rates by 0.50% on September 18, its biggest surprise since 2008. It was the first rate cut since the COVID-19 crisis in March 2020.
The Fed is trying to keep inflation moving toward its 2% target through regulation. However, the Fed acknowledged that the economic outlook is uncertain and will carefully evaluate the data received at its next meeting. (Setting the stage for market volatility)
Below is a chart of changes made to the Fed's statement between July and September.
The US government spends money as if there is a crisis.
In the first 10 months of fiscal 2024, the deficit reached $1.5 trillion.
That’s larger than any year before the coronavirus crisis, including 2009, the final year of the financial crisis, when the deficit was $1.4 trillion.
According to expert analysis, there is currently a 50% chance that the United States will fall into a recession by June 2025.
That proportion has more than doubled in the past month, compared with just 10% in July.
In addition, the market expects a 50% chance that the Federal Reserve will cut interest rates by at least 200 basis points in the next eight months.
By comparison, the Federal Reserve expects to cut interest rates by 150 basis points by the end of 2025.
The Fed's interest rate cut reflects its high vigilance against the current economic situation, especially in the face of reduced consumption, shrinking manufacturing and a weak job market, striving to achieve a "soft landing" of the economy and avoid a deeper recession. Through policy regulation, the cost of borrowing can be reduced, more liquidity can be released into the market, and the liquidity of funds can be rotated. In the long run, this policy is a favorable growth trend for the crypto circle.
As for short-term fluctuations, whether the interest rate cut is beneficial or harmful mainly depends on the market's interpretation: if the interest rate cut is too large or the timing is abrupt, it may suggest that the economy is facing deeper structural problems, such as economic growth slowdown, weak job market, rising inflationary pressure, and lower consumer index. These factors will cause investors' concerns, leading to price fluctuations or even short-term plunges.
The Fed's top priority right now is labor market issues, and as we know, the outlook for the labor market is not good.
⚠️If the economy can be boosted again through labor market regulation, BTC’s sprint to 100,000 is not out of reach.
