Just now, the financial circle has exploded! Federal Reserve Vice Chairman Bowman publicly stated support for three interest rate cuts this year and called for starting the rate-cutting process in September. This news instantly ignited the market, and global investors are wide-eyed, while in our crypto circle, it has stirred up tremendous waves!
Bowman's dovish remarks are not a trivial matter. It should be noted that the Federal Reserve had maintained interest rates unchanged five times in a row, and the dovish and hawkish factions had been at a stalemate. Now, Bowman's significant statement is likely to break this deadlock, causing the probability of a rate cut in September to soar. According to CME's 'FedWatch' data, the market currently expects a 90.7% probability of a 25 basis point rate cut in September.
So what does this mean for the crypto circle? Simply put, once interest rates are cut, a large amount of hot money that has been locked in banks due to rate hikes will rush into the market like wild horses searching for new investment opportunities. And in the crypto circle, with its characteristics of high risk and high return, it has always been a coveted place for capital. Looking back at the Federal Reserve's rate-cutting cycle in 2019, Bitcoin soared from $3,000 to $14,000, with an increase of over 400%. History may not simply repeat itself, but the underlying logic of capital flow is the same.
From a technical perspective, after Bowman's speech, Bitcoin's price quickly surged, briefly breaking through the $120,000 mark, with trading volume significantly increasing. Mainstream cryptocurrencies like Ethereum also followed suit. This is not only an explosion of short-term market sentiment but could also be the prelude to a new bull market.
However, we cannot be blindly optimistic. Although the expectation of interest rate cuts is a long-term positive for the crypto circle, the market is still full of uncertainty in the short term. In August, there will be non-farm payroll and PCE data releases, and these data may affect the Federal Reserve's final decision. Moreover, the extent, frequency, and subsequent policy directions of the rate cuts are all variables. Once market expectations fall through, cryptocurrency prices are likely to experience a significant correction.
For us crypto investors, this is a time of both opportunity and risk. On one hand, we must closely monitor the Federal Reserve's policy dynamics and macroeconomic data to grasp market trends. On the other hand, we must reasonably control our positions, set stop losses, and avoid being 'cut' by market fluctuations.
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