Fed Rate Scenarios
Let's consider several possible scenarios:
1️⃣A 50 bp rate cut will lead to impulsive growth in both the stock market and crypto.
➡️Our assessment of the probability of such a scenario: 30%
2️⃣50 bp rate cut, stock market growth and cryptocurrency fall (maybe after the first green impulsive candle). Oddly enough, such a scenario has the right to exist. The fact is that cryptocurrencies have been trying to take into account the 50 bp rate increase since last Friday. And after the actual event, there are no new drivers for growth in the coming days. It is also worth remembering that even after a 50 bp cut, the Fed rates will still remain high. That is, cheap money will not immediately flow like a river into the market. Accordingly, the buy the rumor, sell the news algorithm is implemented. The fall will not be protracted.
➡️Our assessment of the probability of such a scenario: 30%
3️⃣A 25 bp rate cut will lead to a sharp fall. It will not be apocalyptic, although it will seem scary at the moment. BTC will once again test the lower boundary of the descending channel that has existed since March.
➡️Our assessment of the probability of such a scenario: 40%
◽️In total, we have 60% in favor of 50 bp with different market reaction options and 40% in favor of 25 bp with a clear reaction. This is an exclusively subjective assessment. As we have been writing since Friday, now is a period of a kind of casino. Our advice to futures traders is not to play this lottery and at least partially remain in cash. Enter the market after the rate decision.