Author: BitpushNews Mary Liu
On Wednesday, the minutes of the July meeting of the Federal Open Market Committee (FOMC) showed that most officials on the Federal Reserve Board favored a rate cut in September if inflation continues to cool.
The minutes showed that at the July meeting, a “vast majority” of policymakers “believed that if data continued to move in line with expectations, it would likely be appropriate to ease policy at the next meeting.” They also noted that “many” Fed officials viewed the stance of interest rates as restrictive and that “some participants” believed that, with inflation pressures continuing to cool, an unchanged rate would mean that monetary policy would increase the drag on economic activity.
The minutes boosted sentiment, with traders betting the first rate cut will come in less than 28 days (the next FOMC meeting is scheduled for September 18). The debate now centers on the size of the first rate cut, with the CME Group’s FedWatch tool showing a 64% chance of a 25 basis point cut in September and a 36% chance of a 50 basis point cut.
Hopes for a rate cut were also boosted by the latest data from the U.S. Bureau of Labor Statistics. Nonfarm payrolls are likely to have fallen by 818,000 in the 12 months through March, or about 68,000 a month. In addition to the total, the report revised employment levels by 0.5%, the largest since 2009. The final revision will be released early next year, but it suggests the cooling of the labor market will take longer than most people think.
According to BitPush data, Bitcoin (BTC) rebounded above $61,000 amid rising sentiment for rate cuts, jumping from the $59,500 support level to an intraday high of $61,865. As of press time, Bitcoin was trading at $61,393, up 3% in 24 hours.
Altcoins largely followed Bitcoin's gains, with 90% of the top 200 altcoins rising on Wednesday. Fantom (FTM) led the gains, up 15.7%, followed by Compound (COMP) and Polygon (MATIC), up 15.3% and 14.4%, respectively. Helium (HNT) led the declines, down 4.6%, cat in a dogs world (MEW) down 3%, and Sui (SUI) down 2.9%.
The current overall cryptocurrency market capitalization is $2.15 trillion, with Bitcoin accounting for 56.2%.
In the U.S. stock market, after falling in midday trading, the major indices rebounded and moved higher after the release of the FOMC minutes, with the S&P 500 and Nasdaq 500 rising 0.42% and 0.57% respectively at the close, while the Dow Jones fell sharply before the close and finally closed flat.
Analysts: Be cautious when entering the market
Although expectations for a rate cut in September are certain, market analyst Bloodgood warned that many people will use this opportunity to inject FUD (fear, uncertainty and doubt) into the market, and investors are better off looking at macro news rationally.
Bloodgood said: "With less than a month to go until the September FOMC meeting, a rate cut is basically a done deal; the only question is whether it will be 25 basis points or 50 basis points. Judging from the current implied probability in the futures market, the probability of one rate cut is about twice that of two rate cuts, but there is no doubt that the long-awaited turning point has finally arrived. You will soon see people confidently saying that this is actually a market disaster because recessions usually occur after the start of a rate cutting cycle."
Bloodgood explained: “When you see these overconfident comments, remember the following: First, how the market will react depends largely on whether these rate cuts are seen as a desperate attempt to repair a badly damaged economy or as a way to stimulate growth after a soft landing, and second, the key word is often; recessions tend to follow the start of a rate-cutting cycle, but the probability of this (if we look back at rate-cutting cycles since 1970) is about 60%, not 90%+.”
“Finally, and most importantly, even in cycles where a recession did occur, the S&P 500 remained higher for much of the subsequent year, so take recession news with a grain of salt,” Bloodgood said.
Looking at Bitcoin’s weekly chart, Bloodgood said Bitcoin is currently in an accumulation zone, but there is no clear indication of where it will go next. He said: “In the big picture, we still see a bearish structure, so there is nothing new here - as long as we don’t make a higher high, there is no hope of continuation, and every upward move will be tested on the downward trend line, so make sure not to enter the market too early.”
Legendary trader Peter Brandt said on X platform that the BTC/GLD ratio shows the price of Bitcoin relative to gold. The ratio is currently 23.4. BTC is still below its 2021 high. The ratio has room to fall below 20. It needs to break through 32.5 to declare BTC/GC in a bull trend.
