Divergent Fed minutes in September trigger market volatility: U.S. stocks rise, crypto markets under pressure
After the release of the minutes of the Federal Reserve's September meeting, global financial markets once again experienced violent fluctuations. The minutes showed that policymakers had significant differences in their views on the extent of recent interest rate cuts. This news not only affected the traditional stock market, but also had a profound impact on the cryptocurrency market.
The minutes clearly pointed out that the "vast majority" of Fed officials supported a larger rate cut, but a few officials still insisted that a 25 basis point rate cut would be more appropriate, and that the 50 basis point rate cut that was finally passed was too large. This internal disagreement has made the market's expectations for future monetary policy more complicated and uncertain.
Affected by this, market observers have adjusted their expectations for the extent of the Fed's interest rate cut in November. The FedWatch tool of the Chicago Mercantile Exchange shows that the market currently believes that the probability of the Fed cutting interest rates by 25 basis points in November has reached 70.4%, while the probability of not cutting interest rates has risen to 29.6%. This change in expectations will undoubtedly have an important impact on the future trend of financial markets.
In the cryptocurrency market, mainstream cryptocurrencies such as Bitcoin (BTC) generally fell after the release of the meeting minutes. BTC spent most of the trading time below $62,000 that day, and then the short-selling force further strengthened, pushing the price below $61,000. It fell 2.25% in 24 hours.
At the same time, the altcoin market also generally fell. Among the top 200 tokens by market capitalization, although some individual tokens such as Baby Doge Coin (BabyDoge) led the gains, with an increase of 26%, and Chiliz (CHZ) rose 15.5%, SuperVerse rose 5.2%, etc., the overall market still showed a downward trend. In particular, FTX Token (FTT) fell the most, reaching 9.6%, while cat in a dogs world (MEW) and Mog Coin (MOG) also fell 8.8% and 8.7% respectively.
At present, the overall market value of the cryptocurrency market is about 2.13 trillion US dollars, of which Bitcoin's market share is still as high as 56.7%, showing its dominant position in the cryptocurrency market. However, in the face of such drastic market fluctuations, investors obviously need to be more cautious about future investment opportunities.
In sharp contrast to the decline in the crypto market, the U.S. stock market rose after the release of the minutes. The stock market showed an upward trend after opening and maintained this upward trend at the close. The S&P index, Dow Jones index and Nasdaq index rose by 0.71%, 1.03% and 0.60% respectively. This performance reflects the market's expected adjustment of the Federal Reserve's monetary policy and confidence in the future economic outlook.
In his analysis of the cryptocurrency market, CryptoQuant analyst Burak Kesmeci raised a point worth paying attention to. He emphasized that if BTC falls below $61,600, short-term holders (STH) may panic sell. According to his explanation, Bitcoin investors can be divided into short-term holders and long-term holders (LTH), and the current price trend may depend more on the behavior of short-term holders. Currently, the average cost of Bitcoin short-term holders for 1-3 months and 3-6 months is $61,633 and $64,459, respectively. If the price falls below these cost lines, especially the average cost of $61,600 for 1-3 month holders, investors' patience may be severely tested, triggering panic selling.
On the other hand, Matt Hougan, chief investment officer of Bitwise, expressed a more optimistic view on the future trend of Bitcoin. He believes that for Bitcoin to hit a new high and break through $80,000, three key factors need to be met. The first is the result of the US election. He pointed out that the US election is of great significance to cryptocurrencies, and the victory of the Republican Party may bring good news to cryptocurrencies. The second is economic factors. Hougan believes that the primary reason people are attracted to Bitcoin is the distrust of the government's management of currency. In the current global economic situation, if the Federal Reserve and economies such as China can introduce effective fiscal stimulus measures, then cryptocurrencies such as Bitcoin are expected to rebound in the fourth quarter. Finally, the cryptocurrency market itself needs to remain stable to avoid major negative surprises.
In summary, the divergence of the Fed's September meeting minutes not only affected the traditional stock market, but also had a profound impact on the cryptocurrency market. Faced with future uncertainties, investors need to be more cautious about investment opportunities and pay close attention to the global economic situation and the trends of policymakers. For cryptocurrencies such as Bitcoin, to achieve a higher price rebound, it is necessary not only to meet certain economic and market conditions, but also to maintain market stability and avoid negative accidents. In this process, investors' patience and rationality will be the key factors in determining success or failure.
