Bitcoin Takes Off, But Is It All About the Fed Rate Cut?Bitcoin experienced a sharp rally last night, soaring from $57,500 to above $60,000 after the US stock market opened, likely fueled by speculation surrounding the anticipated rate cut. However, its crucial to note that a rate cut doesnt necessarily imply price increases in Bitcoin
Bitcoin Takes Off, But Is It All About the Fed Rate Cut?
Bitcoin experienced a sharp rally last night, soaring from $57,500 to above $60,000 after the US stock market opened, likely fueled by speculation surrounding the anticipated rate cut. However, its crucial to note that a rate cut doesnt necessarily imply price increases in Bitcoin. The risk of an economic recession remains, and if market sentiment turns bearish, the price could plunge.
Besides Bitcoin, most other cryptocurrencies remained stagnant around $58,000, with altcoins underperforming. Ethereum, often jokingly referred to as Ethereum, the currency to short when in doubt, continued its downward trend. SOL performed blandly, showing minimal fluctuations and lacking any significant positive news.
With just 12 hours left before the Fed announces its interest rate decision, the market is expected to see significant volatility. For investors uncertain about the market direction, its recommended to exit and observe, avoiding high-leverage operations.
Federal Reserve Chairman Powell, known as a master of expectations management, has two core objectives with this rate cut: to initiate a reduction in interest rates to prevent the market from falling into recessionary expectations. Without Powells management, market discussions would center around "rate cut" or "no rate cut." While a cut would be positive, it would likely lead to substantial market fluctuations after each cut, potentially causing a stock market decline and fueling recession fears.
However, Powell has shifted the focus to the rate cut magnitude, such as 25 basis points, 50 basis points, or even 75 basis points (as some voices suggest), effectively eliminating the no rate cut option. This way, a 25-basis-point cut won't be perceived as a sign of a recession, while a 50-basis-point cut could be interpreted as an indication of recession concerns.
Based on this logic, I believe a 25-basis-point cut is most likely, while the 50-or 75-basis-point scenarios are tools for managing expectations. For the market, a 25-or 50-basis-point cut doesn't make a significant difference; what matters is the initiation of the rate cut itself. As the central bank of central banks, the Feds decision to embark on a rate cut signifies the entry of global markets into a loose monetary policy cycle, allowing other countries to confidently follow suit.
Ideally, the market would benefit from a 25-basis-point cut, enabling a steady and sustainable upward trend.
Powell's expectations management strategy can be likened to a story: Imagine trying to open a window in your neighbor's wall. A direct request would likely be rejected. Instead, you could start by discussing opening a door, and then, in a seemingly compromising move, propose a window as an alternative. This way, both parties find a solution.
Besides rate cut expectations, early voting in Pennsylvania could also influence short-term market trends. Trump has urged people to vote on Twitter, and the voting deadline in Pennsylvania is October 21st. There could be developments during this period that impact market sentiment, making it worth watching.
Finally, a personal note: Many people in the crypto space are susceptible to doubt from family, friends, and even skeptical voices within their own communities. This can undermine their confidence in their holdings and their ability to resist the temptations of "100x altcoins" or "1000x meme coins." Ultimately, they end up losing their Bitcoin holdings, gradually seeing their stash dwindle...
Today, a single Bitcoin has become a luxury item. The more affordable a product, the more people buy it. However, with some things, the harder it is to obtain, the more people desire them.
The difficulty in acquiring a Bitcoin today far surpasses owning the world's most advanced mobile phone. In the future, it might even be harder to possess a Bitcoin than to own the world's most advanced car, a home in the world's most livable city, and so on.
Remember, there are only 21 million Bitcoins, whereas there are approximately 60-80 million millionaires worldwide. Even if we disregard lost or hoarded Bitcoins, if 21 million Bitcoins were evenly distributed among these millionaires, replacing their $1 million assets with one Bitcoin each, only 3-4 individuals would get a Bitcoin.
So, even if one Bitcoin equals $1 million, is it expensive? Will there be a lack of demand? Absolutely not. It's not expensive at all.
If you're not yet a millionaire and have had the fortune to participate in Bitcoin's journey, owning a Bitcoin means you'll join the ranks of global millionaires if you don't lose your Bitcoin along the way. You will then be among the elite 1% of the world's nearly 8 billion people.
Note: This content is for informational purposes only and does not constitute investment advice.
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