🫡Why did the Fed's first interest rate cut cause the market to collapse??? (The first time, mind you).
🤓🤓🤓 Let me give you a few examples of the sharp market drops in the U.S. S&P 500 index.
- In 2001 (Dotcom bubble) after the Fed's first rate cut, it took 3 years for the S&P 500 index to return to its previous peak before the rate cut.
- In 2008 (Financial crisis) after the Fed's first rate cut, it also took 3 years for the S&P 500 index to regain the 2007 level.
- In 2020 when the Fed cut rates, the market also saw continuous sell-offs, and it took over a year to recover.
🥰🥰🥰 So what are the reasons that the Fed's first rate cut caused such a significant market collapse?
🧐There are 4 main reasons:
1️⃣. The Fed cutting rates is a signal of a weak and struggling economy, making investors concerned about withdrawing capital, especially in volatile markets like crypto.
2️⃣. The market had grown strongly during the rate hike period; when rates are cut, it seems the market has peaked and needs correction.
3️⃣. The margin borrowing rate was pushed up high in anticipation of the Fed's rate cut.
4️⃣. Time is needed for the Fed's policies to take effect.
🚫🚫🚫So whatever you do, don't fomo when the market is rising on the day the rate cut is announced (the market won't rise gradually, it will rise slowly, slowly, making you regret not getting in). There are many stocks that will run to that deadline.
🥰 Finally: this is a personal opinion, not investment advice. No one is going to compile these hidden truths for you. No one works and gets insulted for being stupid and still continues. All for the Vietnamese community that is not easily led astray 😍
#MarketPullback #BTC #ETH #Fed #FOMO
🤓🤓🤓 Let me give you a few examples of the sharp market drops in the U.S. S&P 500 index.
- In 2001 (Dotcom bubble) after the Fed's first rate cut, it took 3 years for the S&P 500 index to return to its previous peak before the rate cut.
- In 2008 (Financial crisis) after the Fed's first rate cut, it also took 3 years for the S&P 500 index to regain the 2007 level.
- In 2020 when the Fed cut rates, the market also saw continuous sell-offs, and it took over a year to recover.
🥰🥰🥰 So what are the reasons that the Fed's first rate cut caused such a significant market collapse?
🧐There are 4 main reasons:
1️⃣. The Fed cutting rates is a signal of a weak and struggling economy, making investors concerned about withdrawing capital, especially in volatile markets like crypto.
2️⃣. The market had grown strongly during the rate hike period; when rates are cut, it seems the market has peaked and needs correction.
3️⃣. The margin borrowing rate was pushed up high in anticipation of the Fed's rate cut.
4️⃣. Time is needed for the Fed's policies to take effect.
🚫🚫🚫So whatever you do, don't fomo when the market is rising on the day the rate cut is announced (the market won't rise gradually, it will rise slowly, slowly, making you regret not getting in). There are many stocks that will run to that deadline.
🥰 Finally: this is a personal opinion, not investment advice. No one is going to compile these hidden truths for you. No one works and gets insulted for being stupid and still continues. All for the Vietnamese community that is not easily led astray 😍
#MarketPullback #BTC #ETH #Fed #FOMO
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
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