The Federal Reserve opens the door to rate cuts!
The Federal Reserve finally announced its first interest rate cut of 50 basis points at its meeting this morning after four years. The Federal Reserve started a rate cut cycle, lowering the federal funds rate by 50 basis points to 4.75%-5.00%, the first rate cut since March 2020.
After the long-dormant crypto market interest rate decision was announced, it once again saw a significant fluctuation. Bitcoin surged from $59,000 to over $62,000, Ethereum rose above $2,400, and altcoins also benefited from the overall market boost and achieved a good increase!
Looking at the history of the previous 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.
Is a rate cut good or bad?
After the interest rate cut decision was announced, you say it is good news, the U.S. stock market has been fluctuating during Powell's speech, and even now it seems to be over, but the ups and downs of the U.S. stock market are still jumping around on the horizontal line. You say it is bad news, there is still a sentiment of rising every now and then!
After the decision was announced in the early morning, the data on the Bitcoin (BTC) chain still reflected more of the data before the interest rate cut. The data after the interest rate cut will only be seen today. There is no obvious risk aversion in the data.
In other words, early investors did not choose to leave the market due to concerns about interest rate cuts. Currently, the investors with the highest turnover are still those who bought the bottom in the past two days. Investors who have recently made profits have sold off a large number of shares, while earlier investors have not taken any obvious actions.
Interest rate cuts open the door to the crypto market, and investors are optimistic about October's potential
Analysts said that the flow of funds to U.S. spot Bitcoin ETFs slowed as expected, as September is usually a weak period. However, Bitcoin's recent upward trend suggests that this month may perform better than expected.
Bitcoin is expected to outperform expectations, driven by a possible rate cut in the U.S. and a strong stock market. As October has always been a strong month for Bitcoin, investors may take advantage of the September pullback to lay out potential opportunities in the fourth quarter.
Robert Kiyosaki, author of Rich Dad, Poor Dad, believes that the price of Bitcoin is "about to start to skyrocket" due to the Federal Reserve's lower interest rates. He predicted that as interest rates fall, investors should abandon "fake assets" and turn to real assets such as Bitcoin, gold and silver. Kiyosaki also highlighted rising inflation, warned of its impact on retirees, and urged decisive investment in real assets.
BlackRock “stands up” for Bitcoin
BlackRock, the world's largest asset management company, recently released a 9-page white paper detailing Bitcoin's unique status as a major asset class.
The white paper points out that Bitcoin is not only a "unique diversification tool", but also difficult to evaluate using traditional asset analysis methods. BlackRock emphasizes that Bitcoin is "almost immune to the macro factors that affect most traditional asset classes", which makes its performance and price prediction challenging. Although Bitcoin is still considered a "high-risk" asset, it has outperformed all other major asset classes in 7 of the past 10 years.
BlackRock believes that the volatility of Bitcoin prices partly reflects its evolving prospects as a global currency alternative. The white paper also mentions that because Bitcoin appears to be independent of global macro factors, some investors see it as a "safe haven" option amid geopolitical tensions.
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