FX168 Financial News Agency (Asia Pacific) - The Federal Reserve announced a 50 basis point rate cut in September, which is basically in line with market expectations and did not trigger the scenario of a 75 basis point cut called for by a group of senators. Fed Chairman Powell emphasized that policymakers are not in a hurry to make large interest rate cuts. Bitcoin briefly broke through $62,000 on Thursday, September 19th, before retracing slightly, with analysts warning of caution in the short-term volatility.
Senators Elizabeth Warren of Massachusetts, Sheldon Whitehouse of Rhode Island, and John Hickenlooper of Colorado sent a letter to the Fed Chairman urging a substantial 75 basis point rate cut this week. The letter emphasized that Powell's delay is threatening the economy and that current monetary policy is too cautious.
Ultimately, the Federal Reserve decided to cut rates by 50 basis points, and there was no 'black swan' event.
Bitcoin's short-term surge has attracted attention to future trading signals.
Against the backdrop of Bitcoin's rally, according to CoinGlass data, the total amount of liquidation in cryptocurrency contracts across the network in the past 24 hours reached $0.186 billion, with shorts accounting for $0.11 billion. A total of over 0.067 million people were liquidated.
(Source: CoinGlass)
(Source: CoinGlass)
However, from this perspective, the data of the liquidation in the early morning of Thursday Beijing time is not particularly serious. It seems that investors have hedged in advance, or have not reached their liquidation price, and cautious market fluctuations in the future will further amplify.
QCP Capital analysts in Singapore predict that the Federal Reserve's decision on Wednesday will have a major impact on the financial markets. In particular, they predict that short-term volatility will intensify after a significant interest rate cut.
QCP pointed out: "We believe that the volatility in the days after the meeting will be high because traders will realign their positions in the coming weeks, and changes in political power may also herald the beginning of a strong macro trend."
Although strategists expect the short-term weakness of Bitcoin prices, they urge investors to focus on long-term trends.
QCP analysts continued: "Despite the expected decline and high volatility, do not let it hinder the upward trend of Bitcoin prices. We tend to have a long-term structure with unlimited upward potential, to take advantage of the potential parabolic rise in Bitcoin prices."
According to Chris Aruliah, Director of Institutional Business at Bybit, a 50 basis point interest rate cut by the Federal Reserve may encourage funds to flow from banks to the stock market and increase investment in high-risk assets, including cryptocurrencies.
"However, the global economic slowdown, weak economic indicators, and geopolitical uncertainties still impact investor sentiment. Although interest rate cuts may be a short-term positive for the crypto market, investors need to remain cautious in the current volatility," he emphasized.
"However, the global economic slowdown, weak economic indicators, and geopolitical uncertainties still impact investor sentiment. Although interest rate cuts may be a short-term positive for the crypto market, investors need to remain cautious in the current volatility," he emphasized.
The Federal Reserve's first interest rate cut in 4 years is aimed at easing the pressure on the US economy and helping the world's largest economy to stay healthy. Interest rates affect a wide range of economic aspects, including the borrowing costs for business operations. With the rate cut, businesses may be more inclined to accelerate borrowing and explore more recruitment and production activities.
In addition, consumers may be more inclined to increase credit spending, both because getting bank loans will be slightly easier, and because the return on savings is slightly lower than the return on spending. In this way, the Federal Reserve can prevent consumers from actively saving more money by lowering the return on savings and injecting more funds into the domestic economy.
As the central bank of the United States, the Federal Reserve has a dual mandate: to control domestic inflation using various policy tools while maintaining stable employment figures domestically. Since interest rate cuts often immediately lead to inflation, the Fed needs to carefully consider the speed and magnitude of raising or lowering interest rates. The rate cut in September means that the Fed believes it has successfully controlled consumer inflation in the United States and expects overall price growth data to continue to fall within the Fed's internal target of 2% annual inflation.
US employment data also plays a role in the Fed's interest rate decisions, as a reference rate that is too high and lasts too long may suppress business activity, to the extent that widespread layoffs may lead to economic distress, increasing the likelihood of an economic recession.
With the dust settled on the Federal Reserve's first interest rate cut in 4 years, investors will immediately turn to speculating whether the Fed will cut rates again when it announces its decision on November 7th. It's too early to judge what the Fed's next steps will be, and policymakers will want to wait for the next batch of economic data and then make any decisions in less than two months.
CoinGape warns that since the Federal Reserve has hinted at cutting rates by another 50 basis points at the remaining 2 Fed meetings, any hawkish remarks could potentially damage investor sentiment. Nonetheless, according to historical trends, some market experts expect market volatility after the rate cut decision. With this in mind, it is advisable for investors to conduct due diligence when trading bitcoin.
