After the rate cut, many people believed that the rate cut was actually the beginning of a decline in the US economy, because the US economy would face a recession. However, after the two-code rate cut, Bitcoin began to rise, rising slowly from US$59,000 to US$62,000. After the number of people claiming unemployment benefits was announced, it rose to US$64,000. Over the weekend, it returned to the US$63,000 range and today it once again stood above 64,000 and launched a charge towards 65,000.
In addition to Bitcoin, Ethereum has also seen a rebound. Ethereum was previously weak due to a decline in node revenue. The decline in transaction fee revenue was also due to the fact that the airdrop of meme coins has now been moved to Layer-2, and user demand for transactions on the Ethereum main chain has declined. However, this week, funds from institutional investors have flowed back to the Ethereum spot ETF, driving Ethereum up. It is currently above 2,600 and is charging towards 2,700.
While institutional investors have returned to buying cryptocurrencies, the Coinbase Premium Index has recently turned significantly negative, representing a decline in demand for Bitcoin from U.S. users. Although U.S. demand has weakened, Bitcoin prices have remained stable, as evidenced by other countries around the world. Users have made up for their purchases, and the FOMO in the global market after the interest rate cut will drive buying pressure, which is a big plus for the price of Bitcoin.
Next, Microcstrategy announced the purchase of more Bitcoin. The company spent $460 million to purchase 7,420 BTC at a price of $61,750 per Bitcoin. The current annual yield is 17.8%. The Bitcoin holdings have reached 252,220 BTC, with a total cost of approximately $9.9 billion. The average purchase price was only $39,266. The news also caused the stock price to surge by 6.7%.
As the U.S. economy enters a cycle of interest rate cuts, Bitcoin's medium- and long-term trend is optimistic, but overall economic data is still a risk. If there are signs of recession, Bitcoin prices may face headwinds. Now the entire market is looking at overall economic data, and fundamentals or funding will not affect prices too much. We need to closely observe changes in the overall economic data in the future. If there are no problems, Bitcoin is expected to break through the $65,000 mark as market concerns dissipate.
The US economy has not yet entered a recession; preventive rate cuts drive market funds
In addition to the recent signs of recession in overall economic data, the Fed's additional rate cuts are also betting that energy and oil prices will continue to fall. These data have given Fed directors greater confidence to take more radical preventive rate cuts. As long as energy prices do not skyrocket, and considering the weak demand in other economies and the premise that only the United States is strong, the risk of a two-point rate cut should not be high.
The main reason for the Fed's two-point interest rate cut this time was that the market initially believed that the Fed must have seen some economic recession and took such radical measures, which also caused global risk assets to lose a lot of blood. The subsequent rebound will have to wait until optimistic overall economic data is released.
In the context of interest rate cuts, fighting the inflation that may be caused by interest rate cuts is an issue that people need to seriously consider. In the past, people often chose gold as a hard currency to fight inflation. But as the cryptocurrency market enters the field of vision of more and more investors, BTC, known as "digital gold", is attracting more and more attention, especially after the approval of the BTC spot ETF, which provides investors with a more secure investment method.
Comparing the price trends of BTC (digital gold) and gold (traditional safe-haven assets), we can find that the two trends are strongly correlated, and the changes in BTC prices have a certain lag in time relative to the changes in gold prices, usually 2-5 months later than the changing trend of gold prices.
Gold is already reaching new highs, and BTC’s new highs won’t be far away.
