Loose expectations may provide momentum for Bitcoin to reach new highs.
Written by: 1912212.eth, Foresight News
The Federal Reserve's meeting decision has captured the attention of all investors in the global financial market. At 2 AM Beijing time on September 18, the Federal Reserve announced a 25 basis point interest rate cut, which aligned with market expectations regarding both the magnitude and timing of the cut. The statement from this decision noted that U.S. job growth has slowed, the unemployment rate has slightly increased, the risks to employment have risen, and the balance of risks has shifted, removing the characterization of a robust labor market. Only Trump's newly appointed board member, Milan, voted against the decision, advocating for a 50 basis point cut.
Last night, the crypto market was filled with risk-averse sentiment, with BTC dropping from $117,000 to $114,700 at one point, but rebounding to around $117,000 after the announcement. ETH fell from around $4,500 to $4,400, but has since recovered to above $4,600. BNB benefited from Zhao Changpeng's hint of a return, nearing the $1,000 mark, currently priced at $995, setting a new historical high. HYPE surged to $59.6, also a historical high. Altcoins experienced a broad rally. In the crypto stock sector, COIN, CRCL, and MSTR saw slight declines, while BMNR and SBET experienced slight increases.
Contract data from Coinglass shows that in the past 24 hours, the total liquidation across the network reached $359 million, with long positions liquidated amounting to $188 million.
Expectations of two more rate cuts by the Federal Reserve this year
Global macro liquidity plays a significant role in driving the prices of crypto assets. Following the Federal Open Market Committee (FOMC) meeting, the Federal Reserve announced that the target range for the federal funds rate was lowered from 4.25% to 4.5% to 4.00% to 4.25%, a reduction of 25 basis points. This marks the first interest rate cut by the Federal Reserve in nine months since the beginning of the year. In the statement released after the meeting, the Federal Reserve primarily adjusted its language regarding employment, specifically mentioning the increased risks to employment.
The decision to cut rates was entirely anticipated by investors. According to CME's "FedWatch" data, the probability of a 25 basis point cut in October is 87.7%, while the probability of maintaining the current rate is 12.3%.
U.S. Treasury Secretary Yellen stated on Tuesday that the market is digesting expectations of a total of 75 basis points in rate cuts from now until the end of the year.
CICC's research report indicates that looking ahead, due to excessively weak employment data, the Federal Reserve is expected to cut rates again by 25 basis points in October. However, after that, rising inflation will make the threshold for further cuts increasingly high, and the space for monetary easing will be limited. The current issue in the U.S. economy is not insufficient demand, but rising costs. Excessive monetary easing may not only fail to resolve employment issues but could also exacerbate inflation, leading the economy into a "stagflation-like" predicament.
Huatai Securities' research report states that considering the potential pressure on the job market in September, which supports a rate cut in October, Huatai Securities has raised its forecast for the number of rate cuts by the Federal Reserve this year from 2 to 3, with additional cuts of 25 basis points expected in October and December.
Rumors of CZ's return, BNB hits historical high
On September 17, Binance founder Zhao Changpeng updated his personal profile on X from "ex-@binance" to "@binance," possibly indicating his imminent return to Binance.
Market rumors suggest that Binance is close to reaching an agreement to lift the compliance oversight imposed by the U.S. Department of Justice (DOJ). A final decision on whether to remove the Binance monitor has not yet been made, as the DOJ continues to review the compliance oversight arrangements in the settlement agreement.
As a result of this news, BNB reached a historical high, and its BNB Chain ecosystem projects also saw significant surges. TST skyrocketed from $0.03 to $0.073, MUBARAK surged from $0.03 to $0.044, and THE rose from around $0.3 to $0.465.
The Solana ecosystem also benefited from the improving market and recent treasury strategies, currently priced at $245. Its ecosystem projects performed well, with PUMP nearing $0.009, having increased over 100% compared to its public offering price. W, due to the announcement of its token 2.0 upgrade plan, also briefly surpassed $0.1.
Future Trends
Matrixport stated that in a loose environment, the concern that "good news is bad news" is unlikely to hold, and it is more likely to drive the continuation of a bull market. The market has already priced in expectations of more than three rate cuts, and this round of easing expectations may provide momentum for Bitcoin to reach new highs.
Bitwise Chief Investment Officer Matt Hougan stated in a recent memo to clients that SOL is expected to perform strongly before the end of the year, with ETF inflows and corporate treasury purchases likely to drive a rally similar to BTC and ETH. A relatively small amount of capital flowing into Solana could significantly boost prices in the coming months, potentially leading to an epic rally by the end of the year.
BitMine shared market insights from its fund analyst Mark Newton, who predicts that ETH will rise to $5,500 by mid-October.
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