$BTC

Today, the Federal Reserve took interest rate cuts, and the subsequent rise in Bitcoin (BTC) prices from $59,000 to $63,700 has triggered widespread discussion in the market about whether a bull market is coming. I think the current rise is more likely to be a bull market or a short-term market band, especially considering that interest rate cuts have brought funds back to the market and enhanced market liquidity. However, historical data shows that since 1980, whenever the Federal Reserve raises interest rates above 5% and then turns to cut interest rates, it is more likely to trigger a financial crisis. This observation reminds us that the process of interest rate hikes is usually relatively stable, but the period of interest rate cuts may become a risk point.

Specifically, several important interest rate cut cycles in the past have been accompanied by the outbreak of major financial events:

After raising interest rates to 20% in 1980, the interest rate cut in 1982 triggered the Latin American debt crisis. The interest rate hike to 9.75% in 1988, followed by a rate cut in 1989, eventually led to the bursting of the Japanese economic bubble in 1999. In 1994, the interest rate was raised to 6%, and then it was lowered from mid-1995. This process indirectly triggered the Asian financial crisis in 1997. In 1999, the interest rate was raised to 6.5%, which burst the IT bubble in 2000. In 2004, the interest rate was raised to 5.5%, and then it began to lower interest rates in 2007, followed by the subprime mortgage crisis in 2008.

Based on these historical lessons, and combined with the current background that the Federal Reserve has raised interest rates since March 2022 and has raised them to 5.25~5.5% as of August last year, I predict that the possibility of a financial crisis between 2024 and 2026 has increased significantly. Considering this macro risk, I predict that the market may rise to the range of US$75,000-77,000 in the short term (1-2 months) due to abundant funds, but it may then pull back due to the outbreak of the financial crisis, especially the high debt of the United States (such as the potential problem of the US$570 trillion national debt), and the pullback range is expected to be between US$33,000 and US$42,000. After this round of correction, the foundation for a new bull market may be laid.

Therefore, my suggestion is that the current bull market is worth grasping, and it is expected to continue to rise for 2-3 weeks, but it is recommended to partially reduce positions at high levels so that you can buy back when it pulls back to the $33,000-42,000 range in the future to cope with and prepare for a new round of bull market cycle.