What impact will the Fed's 2-digit interest rate cut have on the crypto market? Will Bitcoin usher in a new round of surge?

The Federal Reserve announced an interest rate cut this morning, lowering the benchmark interest rate by 0.5% to 4.75% to 5%. Subsequently, Bitcoin surged, breaking through $62,000. Generally speaking, interest rate cuts will benefit risky assets, so now the Federal Reserve After the interest rate cut cycle starts again, will Bitcoin see a rise after a large amount of liquidity is injected? (Preliminary summary: Key points of the Federal Reserve's decision-making: Reasons for Ball's sharp 2-digit interest rate cut, interest rate dot plot analysis, and shift to focus on employment) (Background supplement: Fed cut 2-digit rate) Bitcoin exceeded 62,000, and Ethereum soared to $2,400 , but Ball’s words sent U.S. stocks into the black) The Federal Reserve announced in the early morning of today (19th) Taiwan time that it would lower the benchmark interest rate by 0.5% (2 yards) to 4.75% to 5%, launching the first interest rate cut since 2020. The currency market then started to rise, with Bitcoin exceeding $62,000, Ethereum rising above $2,400, and altcoins also performing well. Will the interest rate cut be beneficial to the currency market? Generally speaking, interest rate cuts will benefit risky assets. As time goes by and interest rates continue to be cut, market liquidity will flood into the stock and currency markets. However, looking back at history, when the Federal Reserve launched its first interest rate cut in many years in September 2019, Bitcoin did not rise in the short term. Instead, it fell 13.54% that month, from US$10,000 to around US$8,300. , because it was a rapid rate cut initiated to rescue the economy from recession. The chart below is a comparison of the S&P 500 Index and US benchmark interest rates since 1980. It can be found that during the 2020 COVID-19 epidemic, the 2008 financial tsunami, and the 2000 Internet bubble, the index fell simultaneously with interest rates. This performance occurred because the Federal Reserve started cutting interest rates at that time. There were more serious economic problems that forced the Federal Reserve to cut costs, which was not good news for the investment market. Reasons for the Federal Reserve’s rate cut this time. Next, let’s take a look at the reasons for this sharp 2-yard rate cut by the Federal Reserve? Chairman Ball emphasized that this is a precautionary measure aimed at maintaining the stability of the economy and the labor market. It does not mean that an economic recession is approaching or that the job market may collapse. This has reduced the market's concerns about an economic recession and increased the possibility of a soft landing. (If a soft landing is successful, it will be good news for global venture capital.) In addition, judging from market data, although the net inflow of Bitcoin spot ETFs has slowed down, it is still positive. The total market value of USDT has increased from 1,047 in April this year. billion has risen to the current US$118.7 billion, and the market value of USDC has risen from US$34.4 billion at the end of August to US$35.5 billion. These data also show that OTC funds continue to enter the currency market. In addition, the currency market will also have seasonal trends. It usually performs poorly in the summer, but will perform well at the end and beginning of the year. In the past 9 years, Bitcoin has been in a bear market from 2015 to 2023, except for October 2018. , all performed strongly, and history may be expected to repeat itself before the end of this year. Source: Conlglass Market reaction After this interest rate cut, the market had mixed reactions. Democratic Senator Elizabeth Warren criticized Ball’s interest rate cut as too late and further cuts were needed. She had previously criticized Ball for putting the economy at risk. , and called for a sharp 3-yard rate cut. Democratic presidential candidate and U.S. Vice President Harris Harris said that the interest rate cut is good news for Americans who are under pressure from high prices. Republican presidential candidate and former U.S. President Trump criticized that the magnitude of the interest rate cut shows that either the U.S. The economy is so bad that it's either Fed politics or both. Scott Helfstein, director of investment strategy at Global Keep funds from leaving the market. Jeffrey Gundlach, CEO of DoubleLine Capital, who is known as the "New Bond King", believes that the Federal Reserve's interest rate cut comes too late. The layoff data shows that the U.S. economy has fallen into recession, and he expects to cut interest rates by another 3% before the end of the year. The base case assumption is that the terminal interest rate will reach 3.50%. Interest Rate Forecast and Economic Outlook According to the Federal Reserve’s latest interest rate dot plot, policymakers expect that a total of 2 more rate cuts will be made in the last two meetings in November and December this year, possibly in these two meetings respectively. A rate cut of 1 yard, or in one of these 2 meetings, there may be a 2 yard rate cut. At the same time, Zhentu predicts that there will be four interest rate cuts in 2025 and two in 2026, which means that the end point of the interest rate cut may fall in the range of 2.75% to 3%, although Ball added that future interest rate levels are unlikely. Return to pre-pandemic ultra-low levels. If the interest rate forecasts for the next few meetings remain within market forecasts, the risk of concerns about a large-scale economic recession will be much smaller, and it is worthy of continued observation. Interest rate dot plot. Source: FOMC related reports Nine consecutive wins! Ethereum band whales quickly liquidated their positions of "13 million US dollars in ETH" before the Fed cut interest rates to make profits. Will the Fed cut the rate by 2 yards? Will Bitcoin plummet? You should pay more attention to two key "horror data" after the Fed's decision. UBS: Weak consumption will cause the Fed to cut interest rates by 100 basis points before the end of the year. What impact will the Fed's 2-digit interest rate cut have on the encryption market? Bitcoin will usher in a new year Big rise? 〉This article was first published in DongZu BlockTempo "DongZu DongTen - the most influential blockchain news media".