During our National Day holiday, some major events occurred in Western countries.
Israel has launched airstrikes and artillery shelling in southern Lebanon, raising tensions in the region. The United States plans to send additional troops to the region to support Israel.
These events led to a stronger dollar, but prices of risky assets fell.
U.S. stocks fell across the board, with the price of Bitcoin falling to as low as $60,160 and Ethereum also falling to $2,420. The overall decline in altcoins was around 10%.
So why did the market suddenly fall?
Mainly because of everyone's concerns about war.
Wars often lead to economic instability and higher oil prices, which can trigger inflation (i.e., rising prices), which can affect the stock market.
In addition, the price drop of Bitcoin is highly consistent with the opening time of the US stock market.
Because U.S. investors are major players in the crypto market, a decline in U.S. stocks will also affect the crypto market.
However, as long as the United States is not directly involved in the war, there will be no big problem.
Although oil prices have risen, they are still within an acceptable range.
Moreover, during the US election, neither party wanted the war to affect the United States.
Another reason for the market decline was the speech by Federal Reserve Chairman Powell.
He signaled there would be no big rate cuts anytime soon, reducing the size of the cut to 100 basis points from 125 basis points.
While that could mean the U.S. economy won’t face a recession, some investors worry it would make a soft landing more difficult, dampening market expectations for quick economic stimulus.
The news worth noting is:
1. Fed's Bostic said he is willing to consider another 50 basis point rate cut if the job market performs poorly
For now, their plan is to gradually ease policy, expecting inflation to continue to decline and the labor market to remain stable.
Bostic remained cautious about inflation as the core PCE (personal consumption expenditures) index was still at 2.7%.
He particularly emphasized that he would pay close attention to the upcoming employment data.
If job growth falls below 100,000 jobs, it would be necessary to reassess the current economic situation.
Recent PCE data also show that inflation is gradually receding.
Therefore, the non-farm payrolls data on Friday night is very critical. If the data is not ideal, market sentiment may become more nervous.
According to CME's "Fed Watch," the market is pricing in a 63.3% chance of a 25 basis point rate cut by November, while the probability of a 50 basis point cut is 36.7%.
2. Coinbase report predicts that Bitcoin will perform better in the fourth quarter of 2024
This is mainly due to the interest rate cuts in the United States and China's implementation of large-scale fiscal and monetary stimulus policies. These factors will increase market liquidity and thus support Bitcoin's performance.
Bitcoin ETFs have attracted a lot of inflows recently.
Last week, Bitcoin spot ETFs attracted a large amount of inflows totaling $1.11 billion.
Among them, BlackRock's Bitcoin ETF had a net inflow of $499 million, which shows that investors' interest in Bitcoin is increasing.
Analysts believe this trend will continue and predict that Asia could be a key force driving the next cryptocurrency bull run.
3. After MicroStrategy increases its Bitcoin holdings next time, its holdings will exceed Grayscale
According to the latest regulatory filing on September 20, MicroStrategy currently holds 252,220 bitcoins, accounting for 1.2% of the total supply of Bitcoin.
In comparison, Grayscale’s GBTC and Mini BTC together hold more than 254,000 bitcoins.
MicroStrategy recently raised more than $1 billion in funding, which it has not yet used or announced.
They are expected to use the money to buy more Bitcoin, which would push their holdings significantly beyond Grayscale.
Judging from recent data, although the price of Bitcoin has fallen back, investors' buying interest remains strong, there has been no panic selling, and many big investors are still choosing to buy at the bottom.
Currently, short-term investors are mainly selling in the market, while long-term investors are buying. Overall, market sentiment is relatively stable.
Overall, both U.S. stocks and Bitcoin fell as investors worried about the impact of the war.
