In the macro market, recent market trading data shows that CME's expectation of the Fed's 25 basis point rate cut in September has dropped to 58%, while the probability of a 50 basis point rate cut has risen to 42%. JPMorgan Chase still predicts that the Fed will cut interest rates by 50 basis points next week. This situation is slightly unfavorable to the market. The first large-scale rate cut of 50 basis points means that the economic situation is worse than expected, which may trigger market concerns about economic recession, thereby suppressing the performance of asset prices.
There is less than a week left before the September rate cut. Before the rate cut, there is a strong wait-and-see sentiment among investors, and investors may remain cautious. At the same time, the price of gold hit a new high, which is a positive signal for Bitcoin. Although the market generally does not believe that gold and Bitcoin belong to the same category of assets, the liquidity of the two is crucial. If the prices of gold and commodities perform well, it means that there is no problem with global monetary liquidity, which is also an important basis for the rise of Bitcoin.
In addition, on September 12, the net inflow of the US Bitcoin spot ETF reached US$39 million, while the Ethereum spot ETF experienced a net outflow of US$20.1 million.
Judging from the results of the past few months: before a rate cut, especially the closer it is to a rate cut, the more obvious the withdrawal of funds from risky markets is.
Taking the current situation as an example, regardless of the coupon rate, the yield of medium- and long-term US Treasury bonds has dropped from a high of 4.5%-5% to 3.5%-4% today. If a rate cut is announced, or even a continuous rate cut cycle is entered, the actual yield is bound to fall further, which will be reflected in the rise in bond prices.
From a financial perspective, now may be the last chance to increase holdings of U.S. Treasuries and lock in a 4% yield, which can last for 10 or even 30 years and is still very attractive. After all, a long-term 4% risk-free rate of return is still extremely tempting.
Therefore, funds seized the last window of time (August-September) and quickly withdrew from risky markets and poured into the fixed income market of U.S. Treasuries, resulting in a lack of large funds in the crypto market in the past few months, creating a kind of "darkness before dawn."
The interest rate cut is an important turning point. Before the rate cut, there was no sense of urgency, and investors generally believed that they could continue to gain returns in the risk market. As the rate cut approached, investors began to have a psychological change of "catching the last train". Therefore, the closer it got to the rate cut, the less expected price increases there were, and the liquidity continued to decline.
However, by the time the rate cut is officially announced, the funds that should be withdrawn have already been withdrawn, and the remaining funds are more determined. If the US economy does not experience a major recession, as the rate cut continues, the liquidity situation will gradually improve, driving the market to gradually recover.
The current state of ETF funds is to sell when the price rises too much and start buying when the price falls too much. The current market value of stablecoins has reached a record high of about 170 billion US dollars. The market is not short of money. Most of the funds are cautiously watching due to the uncertain economic situation in the United States, waiting for clear signals to appear.
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