[Comparative to Daily Market News] The Federal Reserve made a big turn and opened, and BTC rushed back

Wednesday afternoon local time,Federal ReservepresidenciesJerome PowellThe announcement that the benchmark interest rate will be lowered by 50 basis points to the 4.75% - 5.0% range marks the beginning of the US monetary policy easing cycle.

In addition to announcing the first rate cut in more than four years, the latest FOMC forecast shows that the Federal Reserve will cut interest rates twice more in 2024, and most officials expect the central bank to cut interest rates by a total of 100 basis points this year. Interest rates are expected to fall further in 2025, to a value of 3.4%, and long-term interest rates will bottom out to 2.9%. This usually helps to stimulate the market, as traders tend to allocate risky assets in the face of a return to loose monetary policy.

According to Bitcoin data,BitcoinThe intraday quickly pulled up and pulled back, surging from the $60,000 support level to an intraday high of $61,357 before returning to support around $60,000. Bitcoin was trading at $60,231 at press time, with a 24-hour volatility of less than 1%.

The altcoin market has had mixed reactions. Among the top 200 coins,ZetaChainLeading the way, up 20.6%, followed bySaga(SAGA) and Nervos Network (CKB), rose 13.7% and 11%, respectively.KuCoinToken (KCS) led the decline, falling 6.1%.originTrail(TRAC) is down 5% and Echelon Prime (PRIME) is down 4.3%.

Currently, the overall market value of cryptocurrencies is 2.09 trillion US dollars, and Bitcoin's market share is 57.2%.

In traditional markets, US stocks rose and fell sharply after announcing interest rate cuts. By the close, the S&P, Dow Jones, and Nasdaq indices all fell, falling 0.29%, 0.25%, and 0.31%, respectively. Spot gold surpassed $2,600 per ounce for the first time during Powell's press conference, then regained gains. At press time, it traded at $2,557.30 per ounce, down 0.46% on the same day.

Volatility is expected to increase further

Joel Kruger, market strategist at LMAX Group, said in a report: “The Federal Reserve met the needs of the market by cutting interest rates more drastically by 50 basis points. Now that the market has priced the easing policy to this extent, the next concern will be whether the market can continue to be optimistic about risk assets under the Fed's easing policy in the future.”

From a technical perspective, Secure Digital Markets analysts noted that BTC's attempt to break through $61,000 failed on Tuesday, and the price retreated after Wall Street closed. The daily chart shows that the 100-day moving average showed a clear bearish rejection and continued to move low over the past month.

BitMEXCo-founder and Chief Investment Officer at MaelstromArthur HayesIn the Token 2049 keynote speech, he also warned about the outlook for asset prices after the first interest rate cut, saying that this could trigger a sharp drop in risky assets.

He said:“I think the Fed's interest rate cut is a huge mistake because the US government is issuing and spending the most money in peacetime. Although I think many people expect interest rate cuts, which means they think the stock market and other things will increase chaos, I think the market will collapse a few days after the Fed cuts interest rates.”

Although liquidity easing cycles have historically favored BTC,HayesWarning that this move could increase inflationary pressure and push up the yen (JPY), leading to widespread risk aversion. He said, “Cutting interest rates now is a mistake because inflation is still a long-term problem in the US and is mainly driven by government spending. Cheaper borrowing will only fuel inflation.”

He also said that potential interest rate cuts could cause the market to fall because it would “narrow the spread between the US dollar and yen” (previously, in early August, investors closed large amounts of arbitrage transactions based on yen, causing a wave of collapse, and BTCRetreat onceup to $50,000 or less).

Block Scholes founder and CEO Eamonn Gashier also warned about the impact of the newly announced interest rate cuts on the market and Japanese yen arbitrage transactions.

Gashier said in a report:“Interest rate cuts of 50 basis points indicate that the Federal Reserve is more concerned about worsening labor market conditions than a second inflationary event. Further interest rate cuts this time will weaken the dollar and may lead to a slight increase in yen/dollar. Although people expect the Bank of Japan to suspend interest rate hikes, the weakening dollar may cause yen arbitrage trading to close again and may have an impact on risky assets.”

He pointed out, “Given Bitcoin's correlation with the US stock market since the launch of the Bitcoin ETF, the performance of the S&P 500 index during the past cycle of interest rate cuts can be a useful indicator of what to expect next. Historically, recession cycles triggered by interest rate cuts of 50 basis points all began against the backdrop of widespread concerns about macroeconomic weakness, which led to a long-term downturn in risk assets. However, the extent of this interest rate cut may be different; it can be seen as the Fed taking additional measures to strengthen the labor market.”

Interest rate cuts of 50 basis points have provided a short-term boost to the market, but market expectations for the future economic outlook of the US are severely divided. Some investors are optimistic about a soft economic landing, while others are wary of inflation and geopolitical risks, so in the short term, market trends may become more complex and volatile.

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