Federal Reserve officials hint at a rate cut in July, is an opportunity in the crypto space coming?
"When the hawks quiet down and the doves sing, the script for capital flowing back into the market is about to open a new chapter."
Federal Reserve Governor Waller publicly stated "the earliest rate cut will be in July". This change in attitude is like dropping a heavy signal bomb within the central bank circle. Officials who previously insisted on continuing to raise rates to curb inflation are now actively providing the market with this generous gift of "rate cut expectations", indicating that there are undercurrents of differing economic judgments within the Federal Reserve.
During the COVID-19 pandemic in 2020, the Federal Reserve's emergency rate cuts and quantitative easing directly propelled Bitcoin from $3,800 all the way to $69,000! This is the power of the "cheap money effect"; when market liquidity floods, the first stop for hot money is often high-risk, high-reward crypto assets. Now institutional investors hold new tools like spot Bitcoin ETFs, and if rate cuts become a reality, the crypto space is likely to become the focal point for capital influx.
However, Jin Zhu's judgment is more cautious: although the probability of a rate cut in July has increased, the Federal Reserve still needs to confirm inflation stability. Currently, the likelihood of a rate cut in September is higher, and the market expects the Federal Reserve to cut rates by 150 basis points this year. Now that Bitcoin has pulled back to around $60,000, it seems more like funds are actively washing their positions before the rate cut. Remember, a rate cut does not mean an immediate surge; the market will rebound due to warming expectations before the cut, but the actual cut may lead to volatility as the good news is priced in. The core logic is that the market always reacts in advance to central bank decisions.
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