Possibility of rate cuts in September
The market has almost determined — the Federal Reserve is firmly set on cutting rates this time, with a probability close to 100%. Starting with a 25 basis point cut, it’s very likely there will be 2-3 more cuts throughout the year. The reason is quite straightforward: the U.S. economic growth has slowed, and the job market has also begun to weaken. Although inflation has not fully returned to 2%, it is generally controllable, and it is quite normal for the Federal Reserve to act at this time. Powell has also been hinting that the policy needs to be flexible, which is essentially a precautionary measure for the market.
Reflecting on history
Let's take a look back at history:
2020 Pandemic Rate Cuts: Bitcoin soared from 5,000 to 60,000, a 12-fold myth, relying on a massive liquidity explosion.
Small interest rate cut in 2019: the result was that Bitcoin surged first, then plummeted later. Why? Everyone was worried about an economic recession.
Therefore, lowering interest rates is not a guarantee of 'only rising and not falling'; it is more of a spark to ignite market sentiment. Whether it can catch fire depends on the overall economic environment.
Impact on the cryptocurrency market
Positive aspects:
Money has become cheaper, liquidity has increased, and some funds will run to high-risk, high-reward places like Bitcoin and Ethereum.
Ethereum has DeFi and real assets on-chain, and institutions are likely to be more optimistic about its long-term value.
Interest rate cuts may also raise inflation expectations, allowing Bitcoin's 'anti-inflation' persona to shine again.
Risk aspects:
Don't forget, when the interest rate cut news lands, it can sometimes mean 'realized benefits.' For example, in December of last year, after the rate cut landed, Bitcoin actually plunged.
Regulation is also a minefield; recently, both the US and Hong Kong have been tightening regulations. If something unexpected happens, the short-term trend will be immediately affected.
If the economy does not recover meaningfully, funds may also flow back to traditional assets, making it easy for retail investors to be cut down.
What if interest rates are not lowered?
Then it would be even more stimulating. If the Federal Reserve unexpectedly holds steady, or even continues to raise interest rates, market expectations will be completely dashed, and Bitcoin will definitely take a hit. Don't forget the interest rate hikes in 2022, which directly cut Bitcoin from 60,000 to 16,000, a bloody warning from the past.
Old-timer's ramblings
Brothers, lowering interest rates is indeed a great boon, but it is by no means a universal remedy. The cryptocurrency market has come this far, and there are too many factors affecting prices: economic data, regulatory policies, market sentiment, and even a single tweet can ignite the market.
In the long run, the factors that determine a bull market are still Bitcoin halving, institutional funds, and the grounding of the Web3 ecosystem. In the short term? Play it safe, don’t go all in; controlling your position is what really matters.
Give the old-timer a follow; I will keep a close eye on the market points and make sure to see the old-timer's published articles in time. Don't act impulsively. Moving steadily is more reliable than any 'get rich quick' dream.
—— Old-timer in the crypto space, discussing the market without selling anxiety, just speaking plainly.
