BiFinance Research Institute: Interest Rate Cuts and Turbulence in the US Stock Market: Can Crypto Assets Become a New Safe Haven?

Recently, the Federal Reserve announced a rate cut that exceeded market expectations. This move attempts to alleviate the pressure of economic slowdown while also exposing the uncertainty of the economic outlook. Rate cuts are typically seen as tools to promote consumption and investment, but when the cuts are too large, they can trigger panic in the market regarding a potential recession. Meanwhile, U.S. stocks also fell in response; although rate cuts can lower borrowing costs in the short term, they do not directly address deeper economic issues such as high inflation, declining corporate profits, and geopolitical risks. The pullback in U.S. stocks has intensified uncertainty about the economic outlook.
In the face of turmoil in traditional markets, many investors are turning their attention to the cryptocurrency market, especially BTC. Digital currencies are characterized by centralization, strong transparency, and immunity from national monetary policies. Although the crypto market has some hedging functions, its volatility, regulatory environment, and market maturity remain significant challenges. Besides BTC, stablecoins and DeFi projects in the crypto market may also serve as tools for investors to diversify risks. Projects related to Real-World Assets (RWA) may particularly attract more investors seeking stable returns. Investors need to carefully consider these factors, especially against the backdrop of a complex global economic situation. When traditional asset classes like U.S. stocks perform poorly, the crypto market often becomes a safe haven for some funds. At the same time, uncertainty in policies, especially regarding rate cuts and other monetary policy changes, will increase market volatility, leading investors to pay more attention to diversification in asset allocation. When deciding whether to use crypto assets as a hedging tool, investors should make reasonable decisions based on their risk preferences, investment horizons, and understanding of the market. Regardless, the crypto market, as an alternative asset outside the traditional financial system, is gradually showcasing its unique charm and potential.