Original author: 1912212.eth, Foresight News
After 4 years, the Federal Reserve finally announced its first interest rate cut of 50 basis points at this morning's meeting. After the long-dull crypto market interest rate decision was announced, it once again ushered in a significant fluctuation. Bitcoin surged from $59,000 to above $62,000, Ethereum rose from $2,200 to $2,400, and altcoins also benefited from the boost of the market and achieved good gains. SEI soared 22% to break through $0.34, and BLUR soared 17% to break through $0.2.
According to coingrass data, the entire network had a liquidation of US$199 million in the past 24 hours, of which US$123 million were short positions.
From the history of the last cycle, in September 2019, when the Federal Reserve announced its first interest rate cut after many years, BTC was not affected by the good news in the short term. Instead, the monthly chart ended with a drop of 13.54%, from above $10,000 to around $8,300. After this rate cut, will the crypto market repeat history, or will it usher in a rising market after liquidity improves?
The Fed will continue to cut interest rates in the coming months
This rate cut far exceeded the market's general forecast of 25 basis points, directly cutting interest rates by 50 basis points. Powell emphasized at the press conference that he did not think that the sharp rate cut indicated that the US economy was approaching a recession, nor that the job market was on the verge of collapse. The rate cut was more of a preventive action aimed at maintaining the "robust" status quo of the economy and the labor market.
After the dust settled, the market generally expected that interest rates would continue to be cut in November and December. It is expected that there will be another 70 basis points of interest rate cuts this year. The published dot plot suggests that there will be another 50 basis points of interest rate cuts this year.
The possibility of a U.S. economic recession, which the market is generally worried about, has become smaller, and the possibility of a soft landing is increasing.
The interest rate cut will have a lasting positive effect on risky assets. Although it may not be effective immediately, as time goes by and the interest rate cut continues, the liquidity of the market will begin to flow out of bonds, banks, etc. and flow into stocks, cryptocurrencies and other markets.
In addition, the upcoming US presidential election in early November this year will also bring short-term shocks to the crypto market. After the results are officially announced, off-market funds that have been waiting and watching may begin to continuously inject into the crypto market.
The current spot market trading volume is still in a downturn, and generally fluctuates around US$60 billion. Apart from the short-term sudden fluctuations caused by special macro events, the market liquidity is still mediocre.
Bitcoin has increasingly become a macro asset that reflects overall economic trends. As liquidity continues to be injected into the market, the crypto market may be able to shake off the past haze.
BTC spot ETFs are still seeing net inflows
As of September 17, the total net inflow of Bitcoin spot ETFs has reached 17.5 billion US dollars. From the end of August to the beginning of September, the eight consecutive days of net outflow ended. Starting from September 12, Bitcoin spot ETFs achieved four consecutive days of net inflow.
When BTC spot ETFs continue to see net inflows, Bitcoin prices tend to be stable and rise. However, once there is a continuous large outflow, the price of the currency will often fall.
At present, after experiencing a long period of currency price volatility and downward trend, the confidence of off-market funds has gradually recovered and they are still buying.
The market value of stablecoins continues to rise
The total market value of USDT has risen from $117 billion to $118.7 billion in the past month, with an inflow of nearly $1.7 billion. If calculated from the total market value of $104.7 billion in April this year, during the overall consolidation and decline of the crypto market, the market value of USDT still increased strongly with an inflow of $14 billion.
The market value of another major stablecoin, USDC, rose from US$34.4 billion at the end of August to US$35.5 billion, with an inflow of US$1.1 billion in less than a month.
The total market value of fiat-backed stablecoins has also hit an all-time high and is still rising.
October is historically a strong month
The interesting thing about the crypto market is that, similar to some stocks, there are seasonal trends. For example, the market generally performs poorly in the summer, and performs well at the end and beginning of the year. Bitcoin has achieved strong positive returns in the past 9 years, except for October 2018 due to the bear market, from 2015 to 2023.
In the second half of 2023, Bitcoin has been rising since October, coupled with the expectation of approval of Bitcoin spot ETF, thus starting a bull market.
Market View
Crypto KOL Lark Davis: 2025 will be the peak of this cycle, and you should sell in time
Lark Davis, a crypto KOL with 500,000 followers on Youtube, said in his latest video released on September 9 that 2025 will be the peak of this cycle, and you should sell and leave at that time. In response to this argument, he gave the following reasons: The global liquidity cycle is expected to peak in 2025 and then begin to decline. China's credit cycle is about four years per cycle, and 2025 may be the peak of China's credit. Currently, the yield on short-term bonds is higher than that on long-term bonds, but the yield curve is gradually returning to normal, which may indicate a shift in the economic cycle. Therefore, he believes that there may be huge market dislocations in 2025, followed by a bear market.
Glassnode: The Bitcoin market is in a period of stagnation, with both supply and demand showing signs of inactivity
Glassnode, a crypto market data research organization, said in a post that the Bitcoin market is currently experiencing a period of stagnation, with both supply and demand showing signs of inactivity. In the past two months, the actual market value of Bitcoin has peaked and stabilized at $622 billion. This shows that most of the tokens being traded are close to their original acquisition price. Since the all-time high in March, the absolute realized gains and losses have dropped significantly, which means that the overall buyer pressure has eased in the current price range.
Hyblock Capital: Bitcoin market deep exhaustion may indicate bullish Bitcoin price
“By analyzing the aggregate spot order book, specifically the order book with a spot order book depth of 0% -1% and 1% -5%, we found that low order book liquidity often coincides with market bottoms,” Shubh Verma, co-founder and CEO of Hyblock Capital, told CoinDesk earlier. “These low order book levels can be an early indicator of price reversals, often preceding bullish moves.
