Fed Minutes Spark Market Volatility, Bitcoin and Gold Dip While Stocks RiseOn Wednesday, October 10th, the stock market exhibited strong performance, while Bitcoin (BTC) and gold, assets commonly considered "safe havens," experienced declines. This phenomenon was attributed to the release of the Federal Reserve's September meeting minutes, which revealed internal discrepancies in the central bank's stance on the magnitude of upcoming interest rate cuts
Fed Minutes Spark Market Volatility, Bitcoin and Gold Dip While Stocks Rise
On Wednesday, October 10th, the stock market exhibited strong performance, while Bitcoin (BTC) and gold, assets commonly considered "safe havens," experienced declines. This phenomenon was attributed to the release of the Federal Reserve's September meeting minutes, which revealed internal discrepancies in the central bank's stance on the magnitude of upcoming interest rate cuts.
The minutes indicated that a majority of officials favored a more substantial rate reduction, while a small contingent advocated for a 25 basis point cut, perceiving the ultimately approved 50 basis point cut as excessive. The minutes stated, "Several participants indicated that they would have preferred to lower the target range by 25 basis points at this meeting, and a few indicated that they would have supported such a decision."
The divergence exposed in the minutes led market observers to temper their expectations for a November rate cut, anticipating that the Fed might refrain from further interest rate reductions. The CME's FedWatch tool showed the likelihood of no rate cut rising to 19%, compared to 15% yesterday and 0% last week.
Advantrade observed that the MOVE Index, which tracks anticipated fluctuations in U.S. Treasury yields, reached its highest point since early January of this year on Monday. This indicated a tightening of financial conditions and growing risk aversion, potentially impacting riskier assets, including stocks and Bitcoin.
Despite facing bearish pressure on Wednesday, the stock market opened higher and maintained its gains by day's end. The S&P index, Dow Jones index, and Nasdaq index climbed by 0.71%, 1.03%, and 0.60%, respectively.
Advantrade pointed out that Bitcoin, after reaching a new high of around $74,000 in early 2024, had been consolidating and gradually declining. While Bitcoin doesn't require Ethereum, Solana, or other emerging altcoins for its long-term success, it frequently experiences negative impacts from mischief within the altcoin realm.
Advantrade suggested that, to achieve a comprehensive crash in the short term, such as a decline to $100,000 within a few months, a wave of pro-crypto sentiment sweeping through the market would be helpful.
The last significant period of volatility for Bitcoin extended from June 2019 to June 2020, during which it traded within a narrow range between $8,000 and $10,000 (except for a brief dip during the COVID-19 pandemic). In late summer 2020, Bitcoin embarked on an upward trajectory, reaching $60,000, largely fueled by stimulus measures implemented during the COVID-19 period.
This year, alongside Bitcoin, the asset management scale of stablecoins has been setting new records. New high-throughput blockchains, such as Sui, Aptos, and Monad, are attracting growing community support. Innovative projects, such as Babylon, are exploring ways to enable Bitcoin investors to generate earnings through staking. The robust and persistent momentum in these domains will bolster conditions conducive to a bull market.
Advantrade highlighted that Bitcoin remains one of the world's top-performing assets, having surged by 49%. The news flow surrounding Bitcoin is remarkably strong, with significant institutional adoption, currently encompassing 60% of the largest hedge funds. Moreover, Bitcoin has entered mainstream political discourse in ways unimaginable just a few years ago.
Two years ago, FTX was collapsing, and SamBankman-Fried was making headlines; today, Larry Fink is discussing Bitcoin taking over the world on television.
In conclusion, the divergence revealed in the Fed meeting minutes triggered market volatility, leading to declines in Bitcoin and gold while stocks defied the trend. Despite short-term pressures, Bitcoin's long-term prospects remain optimistic, fueled by widespread institutional adoption and a continuously growing stream of news.
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