👉 Recent Federal Reserve Developments and Market Expectations

Recently, the main factors affecting the market are these two events:

· Thursday at 2 AM Beijing time: Release of the minutes from the July FOMC monetary policy meeting.

· Friday at 10 PM Beijing time: Federal Reserve Chairman Powell's speech at the Jackson Hole Global Central Bank Annual Meeting.

The market hopes to find clues about whether and when the Federal Reserve will cut interest rates from these events. Currently, market expectations for a rate cut in September are relatively high, with futures market data indicating a 25 basis point cut is anticipated. However, some recent economic data (such as a higher-than-expected Producer Price Index (PPI)) shows that inflation remains sticky, raising concerns among some investors that a rate cut may be delayed or smaller in magnitude.

👉 Recent Performance of Bitcoin

Affected by the changes in expectations mentioned above, Bitcoin's price has experienced a pullback:

Indicator Change Source

Bitcoin Price Down over 3%, briefly falling below $113,000

Ethereum (ETH) Down over 5%

Total Cryptocurrency Market Capitalization Decreased by approximately $107 billion

👉 How Federal Reserve Policy Affects Bitcoin

The Federal Reserve's monetary policy primarily influences Bitcoin prices through the following mechanisms:

1. Market Liquidity Expectations: A rate cut or indication of a potential cut typically suggests that market liquidity may increase. Some funds may flow into assets like Bitcoin seeking higher returns. Conversely, if rate cut expectations weaken, market sentiment may turn cautious.

2. Interest Rate Environment and Asset Attractiveness: High-interest rates make interest-bearing assets (such as bonds) more attractive, which may weaken the demand for non-interest-bearing assets like Bitcoin.

3. Strength of the Dollar: The Federal Reserve's hawkish stance (favoring rate hikes or maintaining high rates) may support a stronger dollar. Bitcoin is sometimes viewed as a hedge against dollar depreciation and inflation.

4. Risk Sentiment: Bitcoin is still considered a high-risk asset by many investors. Concerns about the economic outlook or uncertainty in monetary policy may trigger a decline in market risk appetite, leading to capital outflows from assets like Bitcoin.

📌 Summary

The Federal Reserve's tendency to delay rate cuts or lower cut expectations due to sticky inflation poses short-term pressure on Bitcoin. This primarily occurs through suppressing risk sentiment and enhancing the attractiveness of the dollar.

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