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Huobi HTX Live Analysis of the Crypto Market Plunge: The Federal Reserve's Rate Cut Expectations in the Second Half of the Year May Boost BTC to New Heights

ChainCatcher news, recently, Huobi HTX held a Twitter Space themed "Can we still catch the bus in the crypto market downturn?"Crypto KOLs J@Crypto, SteveRen, AK, 527, and Big Brother were invited to attend and shared trading strategies behind the significant drop in the crypto market. The five guests generally believe that Trump's tax cuts, deregulation, and tariff policies, combined with the Federal Reserve's high interest rates of 4.25%-4.50%, have hindered global capital flows and reduced market liquidity.At the same time, the Solana celebrity coin controversy, the Bybit theft incident, and the repeated rejection of state-level Bitcoin reserve bills in the U.S. have led to a concentrated outbreak of negative news, causing the crypto market to decline continuously. J@Crypto believes that the downturn is a short-term shock, and long-term confidence remains. Institutions and traditional funds are slowly positioning themselves, which will extend the bull market cycle. SteveRen analyzed from a technical perspective that Bitcoin has reached the bull-bear boundary EMA200 moving average, and a sharp decline is unlikely to see a quick rebound in the short term.From the perspective of ecological construction, Ethereum is superior to Solana and SUI, with certain potential for an explosion. Big Brother optimistically believes that the Federal Reserve's expectation of interest rate cuts in the second half of the year may boost BTC to new highs. In extreme market conditions, prioritizing BTC with a 70%-80% position allocation, while managing positions and risks, can outperform most people. 527 believes that BTC will oscillate at a high level within the range of 70k-105k. During this period, there may be innovations and explosions in the on-chain ecosystem. Large positions can be allocated to wealth management or held in BTC, while small funds can seize on-chain opportunities.In contrast, AK is more pessimistic. He believes that the bull market ended last year, and the bear market has arrived. Altcoin liquidity has dried up, leaving no room for rebounds; funds can be placed in wealth management products on exchanges like Huobi HTX, such as USDD with up to 20% annualized returns; or one can wait for lower prices to heavily invest in BTC.

Viewpoint: The expectation of the Federal Reserve cutting interest rates will provide support for risk assets such as cryptocurrencies

ChainCatcher news, according to Jinshi reports, the market in January 2025 will face multiple risks and opportunities against the backdrop of Trump's inauguration and the release of non-farm data. Michael Rosen, Chief Investment Officer of Angeles Investments, pointed out that the period from November to January is usually a strong performance time for the market. Historical data shows that the S&P 500 index performs well during the last five trading days of December and early January, known as the "Santa Claus rally." The upcoming employment data and corporate earnings reports will provide key insights into the economic health of the market.Helen Given, Deputy Head of Trading at Monex USA, emphasized that the inauguration of a new government is often accompanied by high uncertainty. The trade policies of the Trump administration could have a significant impact on the global currency market, and the actual effects of policy implementation remain to be seen. Given believes that investors need to pay attention to the actual implementation of proposed policies, which may affect currencies such as the euro, Mexican peso, and Canadian dollar.Damon Polistina, Head of Research at Eaglebrook Advisors, mentioned that a pro-crypto Trump administration could bring positive catalysts to the crypto market. The Federal Reserve's expectations for interest rate cuts may support risk assets like cryptocurrencies, and any positive economic data will further drive market momentum.

Bitwise CIO: The downgrade of the Federal Reserve's interest rate cut expectations will not change the bullish trend of cryptocurrencies

ChainCatcher news, Bitwise Chief Investment Officer Matt Hougan expressed his views on X, detailing why he believes the current bullish trend in the cryptocurrency market will continue.Despite the Federal Reserve's latest policy statement causing a short-term shock to the market—reducing next year's rate cut expectations from 4 times to 2 times—Hougan believes this is merely a brief interlude in the bull market process. He pointed out that the cryptocurrency market has developed an endogenous momentum independent of Federal Reserve policy, with four core trends continuously driving industry development:Washington's regulatory attitude has clearly shifted to a more supportive stance.Institutional investors are entering the market at an accelerated pace, with ETF funds continuing to flow in.Government and corporate entities are strategically increasing their Bitcoin holdings.Breakthroughs in programmable blockchain technology.From a technical perspective, Bitcoin's 10-day exponential moving average (approximately $102,000) continues to stay above the 20-day moving average (approximately $99,000). Hougan stated that this classic technical indicator has historically reflected market trends well.Hougan emphasized that the cryptocurrency market is in a new multi-year bull market cycle, and he expects that a 50bps rate cut will not change this.

4E: The Federal Reserve sharply cuts interest rate expectations, causing a collapse in global markets

ChainCatcher news, the Federal Reserve announced on Wednesday a scheduled rate cut of 25 basis points, but significantly raised future policy rate expectations and inflation expectations, now expecting only two rate cuts totaling 50 basis points next year, halving the previous expectation.According to 4E monitoring, after the release of the Fed's dot plot and economic outlook, risk aversion sentiment surged, causing all three major U.S. stock indices to decline. The S&P 500 index fell by 2.95%, the Dow Jones dropped by 2.58%, marking its longest losing streak since 1974 at ten consecutive days, and the Nasdaq fell by 3.56%. Tesla dropped over 8%, leading the decline among tech giants. Cryptocurrency-related stocks also fell broadly, with MSTR down 9.52% and Coinbase down 10.2%.The Fed's actions have dragged down the U.S. stock market, leading to a significant correction in the crypto market. BTC fell below $100,000, with Powell's remark that "the Fed does not allow nor intends to hold Bitcoin" intensifying selling pressure, resulting in a Bitcoin decline of up to 6.2%, reporting at $99,235 before the deadline. Ethereum briefly dipped to $3,542, a drop of 7.27%, while altcoins generally experienced double-digit declines. In the past 24 hours, the total liquidation amount in the cryptocurrency market reached $842 million, deepening market panic.In the forex and commodities sector, the Fed's drastic cut in rate cut expectations pushed the dollar index up over 1% to a two-year high; gold prices fell over 1% to a one-month low; U.S. crude oil inventories decreased, pushing oil prices higher, but the slowing pace of rate cuts dampened oil demand outlook, causing oil prices to rise and then gradually erase gains.After announcing a rate cut of 25 basis points to 4.25%-4.5% as expected in this meeting, the Fed's released "dot plot" indicated that only two more rate cuts are expected by 2025, halving the planned number of cuts compared to the September dot plot, with a hawkish stance exceeding expectations, leading to extreme fear in the market. Fed officials also expect two more rate cuts in 2026 and one more in 2027.

4E: The expectation of a pause in interest rate cuts next year has weakened the US stock market. This week, attention is on the Federal Reserve's interest rate meeting

ChainCatcher news, according to 4E monitoring, the S&P 500 halted a three-week winning streak last week, falling 0.64% for the week; the Dow Jones dropped a cumulative 1.82% over the week, marking seven consecutive trading days of decline; the Nasdaq gained a cumulative 0.34% over the week, breaking the 20,000 point mark for the first time in history.Bitcoin rose back above $100,000 last week, setting a record for the longest seven-week winning streak since 2021. The altcoin market saw a decrease in enthusiasm, with a general pullback. Over the week, Bitcoin ETFs saw a net inflow of $2.115 billion, Ethereum ETFs had a net inflow of about $712.7 million, and the supply of stablecoins increased by $2.1 billion, indicating a sustained positive outlook for funds. As of the time of publication, Bitcoin surged suddenly, breaking its historical high to reach $106,648, with the top ten cryptocurrencies also seeing an increase of nearly 1% to 4%.In the forex commodities sector, the US dollar index performed strongly last week, breaking above 107 on Friday and continuously refreshing a two-week high, with a weekly increase of nearly 1%, marking the best weekly performance in a month, while non-USD currencies fell cumulatively over the week. International oil prices surged across the board last week due to geopolitical tensions, halting two weeks of declines, with US oil rising over 6% for the week and Brent oil increasing by 4.54%. Benefiting from market expectations of an upcoming interest rate cut by the Federal Reserve next week, spot gold rose a cumulative 0.56% over the week.The most anticipated economic event this week is the FOMC meeting to be held by the Federal Reserve on Wednesday, followed by the announcement of interest rate decisions and quarterly economic forecasts on Thursday. The market has already fully priced in expectations for a 25 basis point rate cut in December, with the real focus being on clues regarding the future direction of Federal Reserve policy. The market expects that rate cuts next year will be more cautious and gradual, with a possibility of pausing rate cuts in January.Additionally, this week marks the last "central bank super week" of 2024, with up to 25 central banks, including those from Japan, the UK, and Sweden, meeting in the same week. The decisions from some key central banks may trigger market volatility, especially in the fast-paced forex and commodities markets. eeee.com is a financial trading platform that supports assets such as cryptocurrencies, stock indices, commodities like gold, and forex, recently launching a USDT stablecoin wealth management product with an annualized return of 5.5%, providing investors with a potential hedging option. 4E reminds you to be aware of market volatility risks and to allocate assets wisely.
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