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Early this morning,The Federal Reserve cut interest rates by 25 basis points as scheduled, lowering the target range of federal funds rate to 4.00% to 4.25%.This is the first rate cut by the Federal Reserve this yearThe FOMC resolution statement emphasized the economic status of the United States, such as slowing employment growth, slightly rising unemployment rate, increasing employment downward risks, and changing risk balance.
There are long expectations for this rate cut, and after it has really been implemented, the market has gradually begun to show the impact of interest rate cuts. What will the future market trend and how will it affect the cryptocurrency market?
If the market expects a 25 basis point rate cut, it may drop twice this year
On Wednesday, September 17, local time, the Federal Reserve announced after the FOMC interest rate meeting that the target range of the U.S. federal funds rate dropped from 4.25% to 4.5% to 4.00% to 4.25%, a decrease of 25 basis points.This is the first decision by the Federal Reserve to cut interest rates this year.The Federal Reserve has cut interest rates three times in a row since September to December last year. After the rate cut in September, the total rate cut in this cycle has reached 125 basis points.
The market has long expected this rate cut. At the close of Tuesday, the Chicago Commodity Exchange (CME) tools showed that the futures market expects the probability of the Fed’s interest rate cut by 25 basis points this week is about 96%, the probability of continuing to cut interest rates at the next meeting in October is about 80%, and the probability of further interest rate cuts in December is close to 74%.US Treasury Secretary Bescent also said that the market is digesting expectations of a total rate cut of 75 basis points from now to the end of the year.
At this FOMC meeting, Trump strongly recommended itNew Fed director Milan voted against the 25 basis points rate cut, he tended to cut 50 basis points.The other twoFederal Reserve Directors Bowman and Waller did not vote for a 50 basis point cut at this meeting, both of whom supported a 25 basis point cut.Previously, at the meeting in July, both of them voted against it, and at the time they believed that interest rate cuts should be cut by 25 basis points.Trump has tried his best to remove himDirector Cook votes for a 25-basis-point rate cut, and the market had expected her to have a more hawkish move before the meeting.
The median interest rate forecast shows that the Fed expects to cut interest rates three times this year, an increase from the last time, that is, after this rate cut, there are two more interest rate cuts this year.The dot chart shows that nine people are expected to cut interest rates twice this year, with less than half of them, six people are expected to cut interest rates no longer this year, and one person is expected to cut interest rates five times, that is, a total interest rate cut of 150 basis points this year.
FOMC statement emphasizes the increase in downward risks of employment
The FOMC resolution statement has been adjusted compared to the wording on economic data in July.In the July statement, it mentioned that “net export fluctuations have affected the data, but the recent indicators show easing economic growth in the first half of the year.” This statement only retains the second half of the sentence, reiterating that “the recent indicators show easing economic growth in the first half of the year.”
This timeFOMC StatementIt does not reiterate that the U.S. unemployment rate is still low and the labor market is stable, butAdjusted to “employment growth has slowed down, the unemployment rate has risen slightly but is still at a low level. Inflation has risen, and is still slightly higher”.The statement said that the FOMC committee focused on the two risks faced in achieving the dual mission of full employment and price stability, and added new judgments on the risk of increasing downward employment.
The FOMC statement also mentioned that the decision to cut interest rates was “because the risk balance has changed.”In addition, this FOMC statement continues to reiterate that the Federal Reserve will continue to reduce its holdings of U.S. Treasury bonds, institutional bonds and institutional mortgage-backed securities (MBS).
Powell: There is no “risk-free path” for monetary policy
Federal Reserve Chairman Powell said at a press conference thatThe U.S. unemployment rate is still low but slightly rising, employment growth has slowed down, and the downward risk of employment has increased.Job growth has slowed significantly, reflecting a decrease in immigration and a decline in labor participation rates.The slowdown in U.S. GDP growth mainly reflects the slowdown in consumer spending.Inflation has risen recently and is still to some extent high.
Regarding the tariff issue, Powell saidThe overall impact of tariffs on inflation remains to be seen.The benchmark scenario is that the impact of tariffs on inflation is short-lived.The risks of sustained inflation need to be managed.The risk balance has changed and employment faces downward risks.Inflation risks tend to rise.Be able to respond in a timely manner.
During the Q&A session of the press conference, Powell said that there was no widespread support for a larger, 50 basis points cut at the meeting this week.In the past five years, the Fed has made very large rate hikes and cuts, which usually happens when policies are significantly misaligned and need to be quickly adjusted to a new level.Powell saidThe rate cut is a risk management decision, adding that he doesn’t think it’s necessary to adjust the interest rate quickly.
Regarding the Fed’s monetary policy, Powell stressed that the Fed is facing a difficult and unusual situation: the labor market is weakening, while inflation remains high.Typically, weak labor markets require lower interest rates, while rising inflation requires stricter policy stance.abaloneWill said monetary policy faces a “scene of bilateral risks, no risk-free path”.Powell also said,He will be firmly committed to the independence of the Federal Reserve.
The impact of interest rate cuts has gradually begun, what is the future trend of the market
The impact of this interest rate cut on the market has begun. After the Federal Reserve announced its resolution, major assets around the world have fluctuated to varying degrees, and major crypto assets have also begun to rise.
US stocks rose and fell in unevenly after the fluctuation. The Nasdaq index of US stocks fell by 1% during the day, but since then it has recovered most of the lost land, and the Dow Jones Industrial Average rose; US Treasury yields fluctuated and rose, regaining the lost land since the Federal Reserve announced a rate cut; gold fell after fluctuation; the US dollar rose after a brief decline, significantly higher than before the resolution was issued.Bitcoin fell briefly after the Fed’s resolution was announced, but then began to gradually rise, and has now risen to around $118,000; Ethereum also showed a significant increase after the interest rate cut resolution was announced, and has now risen to around $4,600.
What impact will the Federal Reserve cut rate this time continue to exert on the market, and what will the trend of the crypto market?Let’s take a look at the market’s views and analysis.
1. Anthony Pompliano, founder of Professional Capital ManagementThe post stated that he believes Bitcoin will continue to rise before the end of the year.The Fed’s interest rate cut will bring cheap funds to assets such as Bitcoin.The Bitcoin bull market is not over yet.
2. TomLee, Chairman of BitMine Board of DirectorsIn an interview with CNBC, the Fed’s interest rate cut will benefit the most: the Nasdaq 100 Index (Mag7+ Artificial Intelligence sector); Bitcoin and Ethereum may experience sharp rises in the next three months; small-cap stocks and financial sectors.
3. MatrixportThe chart analysis stated that since November 2023, the money supply indicators have been highly consistent with the price trend of Bitcoin, reflecting expectations of weakening the US dollar and global liquidity expansion.While this correlation is a useful signal, it is more of a proxy indicator of market sentiment than a reliable driver.However, it still points to the possibility of Bitcoin’s further rise, although history shows that it is cyclical.The dollar may weaken as the Fed cuts interest rates, which will boost liquidity and support Bitcoin prices.
4. Dan Morehead, founder of Pantera Capital, crypto fundIn an interview with CNBC, Bitcoin still accounts for a very low proportion of global wealth.So I think it could hit $750,000 in four or five years.
5. According to crypto analyst @ali_charts, Bitcoin (BTC) seller risk ratio has just dropped below 0.1%.This level usually indicates a local bottom, accumulation stage, and a lower selling pressure.
6. Bitfinex AlphaBitcoin broke its three-week decline last week and recovered its key support level of $112,500 after holding the low of the $107,500 range.The heat map of the cost base distribution shows that there is a significant dip buying around $108,000, while supply clusters between $110,000 and $116,000 currently define short-term ranges.The total market value of cryptocurrencies rose 4.8% to $3.97 trillion last week, reflecting a cautious but continuous preference for overweight. Although volatility continues, both BTC and the market seem to be stabilizing and may usher in recovery once they break through the resistance level.
7. David Kelly, Chief Marketing Strategist at JPMorgan Asset ManagementSeeing signs of a gradual slowdown in the U.S. economy, he expects this to put pressure on cyclical industries such as manufacturing or retail.He said lowering the benchmark interest rate is unlikely to reverse that.
8. MatrixportThe chart released said, “In the loose environment of the Federal Reserve’s interest rate cut, the concerns about “realizing favorable benefits” are difficult to establish, and it is more likely to promote the continued bull market. Monitoring shows that the market has digested more than three times of interest rate cut expectations, and this round of easing expectations may provide impetus for Bitcoin to hit another new high.
