The key is the path of rate cuts, not the magnitude of the September cut

Fed's Goolsbee gave a speech at 23:00: Today's employment data is a continuation of what we have been observing. The job market is slowing down. Inflation data every month is lower than expected. Policy has just been tightened, which raises some serious questions for this meeting and the next few months. We must ensure that the labor market does not deteriorate. The content of the Fed's Beige Book is relatively pessimistic, suggesting that there are warning signs in the economy. The general consensus within the Fed is that there will be multiple interest rate cuts.

Asked about a bigger rate cut, Goolsbee said keep an eye on the dot plot, which doesn't show inflation falling so quickly or unemployment rising so high.

Asked whether there would be a 50 basis point rate cut in September, Goolsbee said the outcome of the next meeting itself was not the most important thing, but the path of rate cuts in the coming months was more important.

Market sentiment is generally bearish


We all know that a rate cut means that a lot of funds will flow out of the U.S. stock market, emerging markets and small and medium-sized stocks will usher in spring, and the crypto market, including Bitcoin, will also usher in a rebound.


If on September 18, the interest rate is only cut by 25 basis points, the market will think that the cut is not enough, the Fed is squeezing the toothpaste, and the U.S. stock market will inevitably fall!


If the interest rate is cut by 50 basis points on September 18, the market will think that the US economy has big problems, so such a strong medicine is taken. The market confirms the recession, and the US stock market still falls.

The price will soar only in the middle and late stages of the interest rate cut, which means that Bitcoin will not continue to recover until October and November, and may reach a new high by the end of the year or in 25 years.


Judging from the market sentiment, the long-short ratio reached a maximum of 3.7 the day before yesterday, but OBV continued to hit new lows. In other words, retail investors continue to buy, but they cannot stabilize, and the selling pressure is very large and continues.


Judging from the data, this is caused by the continuous outflow of Bitcoin spot ETF. As of last Friday, it had been outflowing for 8 consecutive days. In this situation, almost no one can catch it.


Before the bull market or the beginning of the bear market


Looking back at the last rate cut cycle, Bitcoin completed its gains ahead of the rate cut, and began to plummet and decline overall one month before the rate cut. It was not until March 2020, when liquidity was completely released after unlimited QE, that the bull market of 2020-2021 was ushered in.

Currently, Bitcoin has also completed a similar early rise, but the subsequent improvement in liquidity is still unknown. The current priority is to stay alive and wait for this moment to come.


Summarize:


The current market, whether Bitcoin or Ethereum, is at a critical juncture. Market sentiment is low, investors are on the sidelines, and the uncertainty of the Fed's policy adds complexity to future trends. However, it is in this turmoil that long-term investors are often able to seize opportunities. With the arrival of October, the market may regain its vitality, and the Bitcoin halving and global macro liquidity may become the key driving force of the future bull market.