Next Thursday, the Federal Reserve will hold a rate meeting. This event has attracted much attention because it may mark the first time in recent years that the Federal Reserve has turned to loose monetary policy, which has a significant impact on the Bitcoin market.
1️⃣ Policy expectations and market reactions
1. Expectations of interest rate cuts: The market generally expects that this meeting will cut interest rates by at least 25 basis points, and there is a probability of a 50 basis point cut. The interest rate cut will increase market liquidity, and capital may flow from low-risk assets to high-risk assets, and Bitcoin may also benefit from this.
2. Market reaction: At present, the expectation of interest rate cuts has been digested by the market to a certain extent. If the interest rate cut is in line with expectations, market fluctuations may be relatively limited; but if the interest rate cut exceeds expectations, or the subsequent speech of Federal Reserve Chairman Powell reveals more key information, the market may react more strongly.
3. Forecast: It is expected that the Federal Reserve will cut interest rates by 25 basis points on September 14, and the market reaction will be relatively stable, but Powell's speech will become a key variable.
2️⃣ The correlation between Bitcoin and US stocks
1. Current status: The recent trend of Bitcoin is highly correlated with Nasdaq, indicating that it is regarded as a high-volatility asset rather than a safe-haven tool, especially after the opening of Bitcoin ETF.
2. Possible decoupling: Bitcoin can only decouple from the trend of US stocks when there is a global emergency or a major positive/bad news in the cryptocurrency market itself.
- (a) If a world emergency (such as war, sanctions, etc.) occurs, it may trigger the release of Bitcoin's safe-haven properties, but it is difficult to predict whether the current international trend will become tense, and there are many interfering factors.
- (b) There are additional major positives or negatives in the cryptocurrency market. Major positives include Trump's victory and the introduction of new policies that are beneficial to the cryptocurrency market; major negatives include Trump's defeat.
