Market Volatility Intensifies Ahead of Fed Policy Shift

Global market fluctuations persist, but unlike last month, we haven't seen a sharp sell-off. However, the upcoming Fed meeting is not just about interest rates - it's a potential change in direction. Historically, loosening Fed policy has triggered market fluctuations.

Recent US labor market data disappointed, fueling concerns about the economy and the Fed's slow response. This led to the worst weekly stock sell-off since March 2023. Last year, rising bond yields caused bank-run-like events, with some banks experiencing 80% drops.

The latest employment data showed a 23,000 shortfall, prompting a 15bp drop in the 2-year treasury yield. Fed member Christopher Waller hinted at a potential larger rate cut, sparking market excitement. However, recession concerns and fears of the Fed exacerbating the situation tempered enthusiasm.

Bitcoin's (BTC) recent performance has been resilient, staying above $52,000 despite market turmoil. Our previous predictions didn't fully materialize, but we did anticipate increased volatility with the policy shift from tight to easing monetary policy.

Historical data suggests that rate cuts can lead to a deeper dip in the short term, potentially in September. However, as the policy shift is digested, a bull run may emerge towards the end of the year, similar to the S&P 500's 100% returns in 2020. This supports the case for a BTC rise in the last quarter
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