Interest rate cut brings a “cold shower”: Has the market script already been written?
Interest rate cuts are a lifeline for traditional financial markets, but for Bitcoin, this time it has become a "cold shower". In 2024, the Federal Reserve cut interest rates twice, by 50 basis points in September and another 25 basis points in December. In theory, this should have injected a shot in the arm for the market. However, the Bitcoin market has gone against the theory. The benefits of the interest rate cut seem to have been "paid for" by the market long ago. Instead of arousing the expected enthusiastic response, there are signs of capital flowing back to traditional assets.
Market 'Early Digestion' of Positive News: Buy Expectations, Sell Facts
The classic saying in the cryptocurrency market: 'Buy Expectations, Sell Facts' has long become the consensus among investors. The news of the Federal Reserve's rate cut was not announced suddenly; the market had started reacting even before the policy was released. Investors adjusted their portfolios and allocated funds early, and when the rate cut actually occurred, the market failed to see a significant rise. Some funds chose to take profits, leading to Bitcoin's 'reverse trend'—a price drop after the rate cut.
Economic Concerns Behind the Rate Cut: Recession Expectations Suppress Risk Appetite
Behind the rate cut lies the shadow of economic recession. Although the Federal Reserve's rate cut aims to stimulate the economy, it actually conveys a signal of economic slowdown. The market is no longer blindly optimistic, and risk-averse sentiment has risen, with funds flowing into traditional safe-haven assets like gold and government bonds. Even though Bitcoin is seen as 'digital gold', its high volatility prevents it from being considered a reliable safe-haven tool. In the short term, some investors choose to sell Bitcoin and shift to lower-risk traditional assets, putting pressure on Bitcoin's price.
Global Capital Flow: Can the Federal Reserve's Rate Cut Leverage Bitcoin?
The initial intention of the rate cut is to release liquidity, but the complexity of the global market means that the effect of this policy is not fixed. A rate cut by the Federal Reserve does not mean that other central banks around the world will also cut rates synchronously, especially when tightening policies are implemented in economies like Europe and Asia. The flow of funds will become even more complex, further impacting the capital flow in the Bitcoin market. The Federal Reserve's rate cut has not effectively improved global liquidity, but rather put pressure on the Bitcoin market.
Strong Dollar: Does Rate Cut Actually Boost Dollar Appreciation?
Typically, rate cuts would weaken the dollar's appeal, but in 2024 this trend has seen a 'reversal'. Tightening policies from other central banks have kept the dollar relatively strong, attracting capital inflows into dollar-denominated assets. As a result, the rebound of the strong dollar has further suppressed the demand for non-dollar assets like Bitcoin. This 'counter-logic' phenomenon has made Bitcoin's performance appear even weaker.
Investor Sentiment: Sudden Drop in Bitcoin's Safe-Haven Demand
Despite increasing global economic uncertainty and rising risk-averse sentiment, Bitcoin has not become a safe haven for capital inflows. Bitcoin's high volatility has made it 'lose favor' in the face of safe-haven demand, with funds flowing towards more stable traditional safe-haven assets like gold and government bonds. Even if long-term investors are confident in Bitcoin, the short-term safe-haven demand clearly leans towards traditional assets, further increasing selling pressure on Bitcoin.
Technical Analysis: Bitcoin's 'Rebound' Has Become a Challenge
From a technical perspective, Bitcoin's trend is also not optimistic. After the rate cut in September, Bitcoin briefly surged to $62,500 but then quickly retreated. After the rate cut in December, Bitcoin fell from $104,000 to $101,000, and the market's reaction appeared unusually sluggish.
MACD: In the 4-hour cycle, both DIF and DEA are in negative territory, and the MACD histogram continues to be negative, with bearish strength prevailing;
RSI: Currently, the RSI is close to the oversold region, indicating a potential short-term rebound demand, but overall remains weak;
EMA: Bitcoin's price has continuously remained below EMA7, still under pressure in the short term, with both EMA30 and EMA120 showing a bearish arrangement, indicating that the downward trend continues.
Historical Review: Bitcoin's 'Roller Coaster' After Rate Cuts in September and December
Rate Cut in September: After a brief rise, it quickly retreated, with market expectations being digested early and significant technical adjustments.
Rate Cut in December: Despite another 25 basis point rate cut, the price of Bitcoin fell, ostensibly because Powell's hawkish comments shattered market expectations for further easing, exacerbating market pessimism.
What Is Hidden Behind Bitcoin's 'Counter-Logic'?
The impact of the Federal Reserve's rate cut on the Bitcoin market is not simply 'rate cut = positive', but involves multiple complex factors: early digestion of market expectations, concerns about economic recession, uncertainty in global capital flows, and changes in investor sentiment. These all cause Bitcoin's trend to 'counter-adjust' in relation to traditional rate cut benefits. For investors, understanding these factors is far more important than simply focusing on the rate cut policy itself. The real market winners are those who can perceive changes in sentiment and grasp the flow of funds.
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