Historically, the situation of starting with a 50bp interest rate cut only occurred in economic or market emergencies, such as the technology bubble in January 2001, the financial crisis in September 2007, and the epidemic in March 2020. With this 50 basis point interest rate cut, the market is still worried about economic problems. If this core concern is not resolved, it will be difficult for the market to see a trend of a sharp rise in the short term, and it will be more like "more rises and more falls, more falls and more rises".
In the short term, due to the release of the depressed sentiment in the crypto market and the decline in risk-free interest rates caused by the interest rate cut, the attractiveness of crypto assets to funds has increased, and a wave of rebound may continue. Since it will take several months to verify whether the economy is in recession, there is no need to panic at this stage.
The crypto market has been suppressed and the decline has been large in the early stage. After the interest rate cut was implemented, the pessimistic sentiment was released. In addition, with the start of the interest rate cut cycle and the continued decline in risk-free interest rates, institutional investors may increase their layout in the crypto market and seek higher returns, which is also a reason.
In theory, the interest rate cut cycle is good for the capital market, but after this rate cut, the market is still uncertain whether the US economy will decline. Although Fed Chairman Powell was very hawkish in his subsequent speech, believing that the US economy is strong and will have a soft landing, the market obviously does not fully believe it.
