This article is reprinted with permission from Huali Huawai, and the copyright belongs to the original author.

As the market expected, the Federal Reserve lowered interest rates by 25 basis points, bringing the federal funds rate down from 4.25%-4.5% to 4.00%-4.25%. This is also the first rate cut by the Federal Reserve this year.

However, Powell's speech sounded very cautious. The gist of what old Powell said was: We will ease policy, but we will do so slowly, depending on the data situation (emphasizing the balance between employment and inflation).

Additionally, according to the dot plot (i.e., the September dot plot), the number of rate cuts expected by the Federal Reserve this year has been raised from 2 (as per the June dot plot) to 3. This means that in addition to this rate cut, there are expected to be 2 more rate cuts before the end of the year, as shown in the figure below. This point may slightly exceed some previous expectations.

From the dot plot above, we can see that currently, 6 Federal Reserve officials support keeping the 2025 interest rate in the current range of 4%-4.25% (no further adjustments), 9 support a further rate cut of 50 basis points to 3.5%-3.75% (which means two standard cuts of 25 basis points), 2 believe there should be another rate cut of 25 basis points (i.e., one more cut), 1 supports a rate cut of 125 basis points this year, and 1 believes there should be one rate hike before the end of the year. Therefore, from the median forecast, the probability of the Federal Reserve cutting rates two more times this year is still relatively high (but it should be noted that the dot plot is merely a prediction tool used by Federal Reserve officials, and whether there will actually be two more rate cuts this year still needs time to verify).

Overall, the 25 basis point rate cut in September and the expectation of 2-3 rate cuts this year were already anticipated by the market. In other words, this action by the Federal Reserve did not come as a major surprise and is considered a relatively mild action that aligns with mainstream market expectations.

From the actual market reaction, it seems that there were no unacceptable violent fluctuations in the short term. After a brief period of turbulence, U.S. stocks did not establish a clear new trend, Bitcoin overall continued to maintain relative stability, and some altcoins experienced a rebound. In summary, there were mixed results.

Let's continue to look at the U.S. dollar index. Overall, the dollar index still appears weak, even dropping to around 96 (a low not seen in nearly three and a half years) after the rate cut announcement. However, due to Powell's cautious speech, the market continues to have new uncertainties regarding the future rate cut path, leading to a subsequent rebound, as shown in the figure below.

In theory, the Federal Reserve's announcement of a rate cut would lead to a decline in the dollar index, but the actual situation was a drop followed by a rise, which may also be a result of market expectations.

When mentioning the dollar index, we might need to compare it with U.S. Treasury yields, specifically looking at the 10-year U.S. Treasury yield. Before the rate cut announcement, the decline in Treasury yields seemed to be suppressed, but after Powell's speech, yields rebounded, as shown in the figure below.

Theoretically, a rate cut is usually considered to lower bond yields, but in reality, long-term bond yields did rebound (rise). This seems to reflect the market's concerns about future inflation pressures, tariff issues, fiscal deficits, etc. In other words, although a rate cut was announced, Powell's cautious signals may lead investors to unwind their previous positions in U.S. Treasuries, thereby pushing up bond yields.

Combining this, we might continue to make a hypothesis (just a simple hypothesis). Under the current rate cut expectations, if U.S. Treasury yields continue to rise while the dollar index remains weak and does not follow suit, then it is possible that some funds may continue to choose to enter Bitcoin (including gold, etc.) for risk hedging. This is one of the reasons we are optimistic about the potential for new opportunities in the cryptocurrency market in the fourth quarter of this year (which for us means new selling opportunities).

Of course, the above is merely a relatively plausible speculation based on the trends of U.S. Treasuries and the dollar. Other factors, such as institutional participation, SEC regulation, ETF fund inflows/outflows, on-chain liquidity, and changes in geopolitical situations, will also have a significant impact on the direction of the cryptocurrency market.

Nevertheless, as mentioned in yesterday's article, short-term market predictions are difficult. However, since the Federal Reserve has announced a rate cut, theoretically, liquidity in the market will increase. At least from an optimistic perspective, we seem to have no reason to be completely bearish on the market. However, due to the existing uncertainties, the most rational choice now should be to remain cautiously bullish and strictly control one's position ratio.

The above discussion is mainly from a macro perspective. If you are someone who enjoys making comparisons, we might as well look at last year's rate cut performance (this is just a simple comparison, ignoring the differences in macroeconomic conditions between last year and this year):

In 2024, the Federal Reserve also cut rates 3 times, announcing a 50 basis point cut on September 18, a 25 basis point cut on November 7, and another 25 basis point cut on December 18. This means that from September to December, the Federal Reserve cut rates a total of 100 basis points. Corresponding to this period, after several weeks of turbulence, not only did BTC start to rise, but ETH also increased by nearly 80%, as shown in the figure below, and the TOTAL3 market cap (the sum of altcoin market caps excluding BTC and ETH) also rose sharply.

More than a year has passed, and now the Federal Reserve has once again announced a rate cut in September. As mentioned earlier, it is highly likely that there will be 3 rate cuts this year (but the cumulative cut may be 75 basis points). Therefore, if you believe that history can repeat itself, with a certain degree of change in liquidity, the fourth quarter of this year is also a phase we should not miss for potential opportunities.

Additionally, many people have previously complained and discussed the altcoin season issue, believing that there cannot be another altcoin season this year. However, currently, from the indicators, the Altcoin Season has quietly approached 80. We wonder what new thoughts everyone has, or whether your heavily invested altcoins have returned to break even?

Of course, the risks in the investment market are everywhere. No one knows what will happen in the future or whether there will be any new black swan events. Strictly controlling one's position is the most important aspect of investing. As we mentioned in our previous article (September 17), one should balance the choices of addition and subtraction in different stages, especially as your investment portfolio (capital size) grows larger. In fact, you should do less, rather than being frequently constrained by short-term volatility. A person's risk curve should be inversely proportional to the growth rate of their investment portfolio.

Related: Federal Reserve Chairman Powell states that there are differences within the Federal Open Market Committee (FOMC) regarding additional rate cuts in 2025.

Original article: “Federal Reserve Lowers Interest Rates by 25 Basis Points, What’s Next for the Market?”

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。