A 0.5 percentage point rate cut by the US Federal Reserve can dampen the markets. At least, this is the conclusion that can be drawn based on historical data.

When the US Federal Reserve began rate cut cycles with 0.5 percentage points in January 2001 and September 2007, the stock market did not perceive it positively.

The periods circled in red are marked by negative returns on the S&P 500, which is associated with economic crises:

- 2001: after a 0.5 percentage point rate cut, the market showed a -12.4% decline in 1 year, and growth was minimal after 5 years - only +2.3%.

- 2007: a similar situation - a -18.9% decline after 1 year and growth of only +7.2% after 5 years. This was associated with the onset of the financial crisis.

The crypto market did not exist in 2001 and 2007. But it would hardly have had the strength to go against the general financial trend.

In other periods (for example, 1998 and 1995), the stock market reacted much better to a 0.25 percentage point reduction in Fed rates. Showing confident growth after several years (for example, in 1995, 5-year growth was 186.4%).

Probably, this time too, a 0.5 percentage point reduction would have meant that everything was bad.So let it be 0.25 🤞.