Is the Fed's Rate Cut Reversal Bringing New Opportunities to the Crypto Market?The Federal Reserve's rate cut plans have undergone a significant shift, causing drastic fluctuations in Wall Street's interest rate market. Unlike previous rate cuts during financial crises, this one seems unrelated to economic conditions and appears more as a preventive measure
Is the Fed's Rate Cut Reversal Bringing New Opportunities to the Crypto Market?
The Federal Reserve's rate cut plans have undergone a significant shift, causing drastic fluctuations in Wall Street's interest rate market. Unlike previous rate cuts during financial crises, this one seems unrelated to economic conditions and appears more as a preventive measure. Recently, expectations for the next Fed rate cut are rising, with the probability of a 50 basis point cut reaching 45.7%, a significant increase from last week's 24.4%.
Potential Impact of Rate Cut
The rate cut has led to depreciation of the US dollar and USDT, with the USD exchange rate dropping from 7.3 to 6.8. This implies a decline in the real assets and purchasing power for USD holders. This trend is driving investors to shift their funds towards other assets like US stocks or cryptocurrencies, with an expected influx of trillions of dollars into the crypto market. Wall Street's "smart money" will also capitalize on this opportunity by leveraging low financing costs for investments.
Historical Experience and Current Market Conditions
Historical data suggests that Fed rate cuts are often accompanied by bull markets. During the 2020 pandemic, despite economic shutdowns, both the crypto market and US stocks surged due to rate cuts. Although the S&P 500 has witnessed sharp declines during some rate cuts, the primary reason is often economic problems triggering the rate cuts, not the other way around.
During Fed rate cuts in 1984, 1989, and 1995, the S&P 500 not only avoided a crisis but continued to rise, exceeding 50%. This stands in stark contrast to the rate cuts during the 2000 internet bubble, the 2007 subprime mortgage crisis, and the 2020 pandemic, which were driven by economic rescue measures.
Currently, the US economy is robust with second-quarter GDP reaching 3%, showing no signs of recession. The Fed's preemptive rate cuts at this stage are meant to prevent a potential economic downturn, reducing the likelihood of a financial crisis and increasing the probability of a soft landing.
Crypto Investment Strategies
In the face of the current market situation, we need to conduct rational analysis, seize opportunities, and formulate suitable investment strategies.
- BNB: Breaking through 600, opening up potential for further growth, recommended for attention.
- Solana: Positioned before the conference, the price has risen from 130 to over 150. A re-entry at 142 is advised, with a 40% upside potential to reach its previous high of 200.
- Ethereum: Add positions at around 2200, repeatedly trading. Currently facing resistance at 2800. Despite the crypto rebound, major indexes indicate further upside potential. The market's greed and fear index is currently at 50, remaining neutral. Therefore, it is recommended to buy on dips.
Historical data reveals that Ethereum's exchange rate against Bitcoin doubled within two weeks during the bull market of 2017 and 2021. Although market performance has been sluggish recently, Ethereum is expected to rise rapidly once the bull market begins.
Conclusion
The current market is in a bull market phase, with dynamic shifts. We share codes every day. If you are uncertain about bull market investment strategies, welcome to follow our platform for the latest layout strategies and market information.
Disclaimer:
The above content is for reference only and does not constitute investment advice. Investing involves risk, and investors should exercise caution.
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