On August 5, 2024, the US Federal Reserve (Fed) held an emergency meeting to deal with the severe collapse of the Japanese market, causing a wave of sell-offs around the world. The Japanese yen fell 13%, while the Korean and Taiwanese markets each fell nearly 10%. Bitcoin prices were also affected, falling 18% in the past 5 days, and S&P futures fell 4%.

In this context, the Fed is expected to cut interest rates by 50 basis points to stabilize the financial situation. Economist Peter Schiff is concerned that cutting interest rates could lead to an economic recession, adding to the current market uncertainty.

Goldman Sachs has increased its forecast for the possibility of a US recession next year from 15% to 25%. Despite the increased risks, they believe the economy remains stable and the Fed has plenty of room to cut interest rates if necessary. Goldman Sachs predicts that the Fed could cut rates by 25 basis points in September, November and December, and if job growth fails to improve, a 50 basis point cut may be necessary. Lower rates could boost risk assets like cryptocurrencies, making traditional savings less attractive and prompting investors to seek higher returns from assets like Bitcoin. Bitcoin is often seen as a hedge against inflation and economic uncertainty. However, rate cuts could also signal deeper economic problems.