After the Federal Reserve cut interest rates by 50 basis points yesterday, the loose monetary policy boosted market sentiment, and the U.S. stock and crypto markets rose. At the same time, the Bank of Japan decided to keep interest rates unchanged, and the yen carry trade did not take place, stimulating cryptocurrency buying. Although whales recently sold 1,030 bitcoins at high prices, equivalent to about $64.27 million, the U.S. economic data raised expectations of a soft landing of the economy, boosting demand for riskier assets and returning demand for Bitcoin, which is highly linked to the U.S. stock market.
After the volatility caused by the initial rate cut subsided, Bitcoin bulls began to gain momentum. On Friday (September 20), Bitcoin briefly hit $64,000 and fell back to $63,779 at the time of writing, a 24-hour increase of 2.53%.
The rate cut is rare, the market reaction is chaotic, and institutions are no longer actively shorting BTC!
Historically, the Federal Reserve's large-scale interest rate cuts have often led to economic growth, stimulated inflation, and given rise to asset bubbles.
This time the Fed announced a 50 percentage point rate cut, an adjustment rarely seen in history. This may have made up for the rate cut in July and was a manifestation of the Fed's delayed action. However, Powell denied that the Fed's rate cut had been delayed for too long and did not think that this action lagged behind the interest rate curve. This rate cut was precisely a reflection of the Fed's commitment not to lag behind the economic situation.
A study of asset performance during several historical rounds of large-scale interest rate cuts shows that three months after the Fed cut interest rates by 50 basis points, the S&P 500 index remained basically unchanged, but small-cap stocks soared, technology stocks performed well, value stocks once again outperformed growth stocks, the US dollar rose, metal prices soared, and the yield curve showed a bull market steepening trend.
And the Fed is expected to continue cutting interest rates, as the start of an easing cycle often coincides with poor performance of risky assets.
Judging from the current market reaction, the performance of the cryptocurrency market has benefited from the Fed's interest rate cut. Tradingview data shows that Bitcoin is currently in a buying state, and the moving average shows a strong buying state.
Retail sales exceeded expectations and were welcomed by the market, temporarily alleviating people's concerns about a recession. The subsequent recovery of investors' interest in risky assets such as cryptocurrencies may stimulate more funds to flow into Bitcoin spot ETFs.
Meanwhile, institutions are no longer actively shorting Bitcoin. Net CME futures positions have fallen 75% over the past five months.
And we can see that a lot of spot BTC is being snapped up, and the exchange derivatives inventory ratio remains flat, but this could change quickly if a short squeeze occurs. The chart pattern is forming a bull flag. The current demand and supply are neutral bearish, but if some liquidations occur, there are signs of entering a bullish structure. Cautiously optimistic.
According to on-chain data, the Bitcoin market is currently in equilibrium, with investors mainly holding, but market volatility may increase in the future. The supply side is tightening, and the number of readily available stablecoins has dropped significantly. However, the rising supply of stablecoins brings greater future purchasing power, creating a tension between current inactivity and potential future demand. This creates a spiral spring effect in the market, suggesting that volatility will increase further in the future.
US spot ETFs continue to see inflows
According to SoSoValue data, Bitcoin spot ETFs have seen a new wave of capital inflows since July. Although there has been a significant weekly decline since the beginning of this month, the overall situation has reversed significantly compared to April-May.
As of the time of writing, the total net asset value of the Bitcoin spot ETF is US$54.85 billion, the ETF net asset ratio (market value as a percentage of the total market value of Bitcoin) is 4.61%, and the historical cumulative net inflow has reached US$17.44 billion.
The cycle begins! Pay attention to the subsequent election!
The announcement of a 50 basis point rate cut ushered in an era of easing. This growth momentum will far exceed the negative impact of the current US election, but it is worth noting that the "US recession" phenomenon will also affect the subsequent price trend of Bitcoin. If the US economy avoids recession and maintains a controlled slowdown path, Bitcoin may retest its previous historical highs. Bitcoin prices will have the opportunity to sprint upwards, and it is expected that the current short-term rebound range will see $65,000, and the reasonable price this year will remain at $70,000.
How to play the next market situation?
Generally speaking, in a big market, the first things to be snapped up are high-quality targets. What are high-quality targets?
Public chain, the leader in each sector.
The public chain is leading the market today. Next, the big blockchain ecosystem, AI, games, depin, rwa and other leading companies will most likely usher in their own market conditions. You can screen targets and wait for opportunities to pull back and increase your positions.
I have selected a few of the most promising labels.
AGE
The market value is $323 million. It is a VC coin. In March, it fell from a high of $3.94 to a low of $0.269. It took only a few months to complete the decline of a coin in a bear market for several years. Fortunately, AEVO's current circulation has reached 84%, with high circulation and low market value. It has just started, and it is time to find an angle to enter the market in a small cycle.
The reference entry price is $0.36-0.37, the stop loss is $0.32, and the short-term target is $0.6. You can double your capital and get a profit.
This one
The current price is $0.24, which is very cost-effective. It has not risen much since the bottom. Brothers who have money and are selecting coins can pay attention to it.
You can enter the market at the current price, with a stop loss of 0.228. The first target is to double the investment and achieve a profit.
ETHFI
Ethereum re-staking track
The current price is $1.48, enter the market around $1.4, stop loss is $1.28, and the first target is around $3.24. Double the investment, profit pattern.
ARKM
Ultraman's investment in AI sector's potential coins
The current price is $1.12, the market value is $1.6 billion, the stop loss is $1, and the first target price is around $1.78.
