Cryptocurrencies surged as the Federal Reserve's aggressive rate cut boosted confidence among traders of risk assets across the board, with the move likely marking the start of an easing cycle by the U.S. central bank. Bitcoin prices rose nearly 6% from Wednesday's shock drop below $60,000 to near $64,000. Yesterday's gains in the S&P 500 and Nasdaq, which rose 1.7% and 2.5% respectively, also helped boost crypto trading sentiment.

Data shows that the 30-day increment of short-term Bitcoin holders (STH) has dropped to the lowest level since 2012. This also means a significant reduction in new demand in the Bitcoin market. Since new demand from short-term holders is needed to maintain price increases, the current momentum for further upward movement of Bitcoin is weak.

The current rise is only on the emotional side. The core trend is the improvement of liquidity. It will take some time to achieve this condition, so it is predicted that there will be a retracement before October to find the starting point of the October rise. In addition, Bitcoin has shown a trend of continuous decline in highs and has not yet reversed and broken through this suppression.

Does the rate cut signal the start of a crypto bull run?

There is clear short-term upside potential given the macro tailwinds: an economy supported by improved liquidity and rate cuts.

The 50 basis point rate cut demonstrates the Fed's proactive approach, prioritizing economic indicators such as the unemployment rate over inflation. Fed officials' outlook for deeper rate cuts has increased significantly since June. The latest dot plot shows nearly all officials agree that interest rates will fall further than previously expected.

Continued strong expectations of rate cuts, combined with a potentially high inflation, low interest rate environment, create the perfect storm for Bitcoin to rise.

Areas that need to be paid special attention to: Restaking

Etherfi has launched the EIGEN airdrop query portal, with a total of 16,480,753 EIGEN tokens allocated to eETH re-staking users. The EIGEN token transfer function will be enabled at the end of September. With EIGEN about to go online, there may be a wave of market for Restaking projects in the future.

Specific currency list

ETHFI: It was the first among the Restaking projects to hold TGE and carried out the first round of airdrops of its ETHFI tokens, which brought a significant wealth effect;

EIGEN: Based on the Restake protocol of Ethereum, it is currently the leading project with the largest market value and the highest TVL;

REZ: One of the core projects in the Restaking track, with a current TVL of US$1 billion;

Other Ecosystems

Bitcoin: The BTC ETF has resumed significant positive inflows, with its unique attributes once again establishing its position as the undisputed king of cryptocurrencies.

New L1: Alternative Layer 1 blockchains continue to be the outperforming sector, especially $SOL, $SUI, $APT and $AVAX.

DeFi: DeFi tokens are facing multiple positive factors, including lower interest rates, an improved regulatory environment, and Trump's involvement in DeFi projects. The main tokens to watch are $UNI and $AAVE.