Last night, the US stock market closed quite frustratingly, with all three major indices collectively plunging at the end: the Dow Jones fell by 0.58%, the S&P 500 dropped by 0.56%, and the Nasdaq fell by 0.5%. Among individual stocks, Trump Media Group (DJT.O) dropped nearly 7%, and GameStop (GME.N) fared worse, falling by 10.8%. In the tech sector, Nvidia (NVDA.O) saw a slight decrease of 0.5%, while in the Chinese stocks, Pinduoduo (PDD.O) dropped nearly 5%, Alibaba (BABA.N) fell over 2%, and the Nasdaq Golden Dragon China Index closed down 0.7%. Overall, market sentiment appears quite gloomy.
Looking at the Federal Reserve, CME data shows that the market currently does not expect a rate cut in June — the probability of maintaining the rate is as high as 97.8%, while the probability of a 25 basis point cut is only 2.2%. The situation for July is similar, with a 77.6% probability of maintaining the rate, and the cumulative probability of a 25 basis point cut just over 22%, while a 50 basis point cut is essentially a wishful thinking. In other words, the market believes that the Federal Reserve will not easily ease monetary policy in the short term, and interest rates will remain high for a while.
This stable interest rate expectation is significant for the cryptocurrency sector. In the past, when the market anticipated rate cuts, funds would flow into high-risk assets like cryptocurrencies, but now, with expectations frozen, funds may lean more towards conservative allocations.
However, looking at it from another angle, stable interest rates can actually lead to less market volatility, allowing institutional funds to allocate more confidently — after all, there’s no need to guess the Federal Reserve's intentions anymore; one can focus on project fundamentals and policy trends instead.