Original | Odaily Planet Daily ( @OdailyChina )_

Author | Fu Ruhe ( @vincent31515173 )_

Last night, Federal Reserve Chairman Powell made positive comments on the interest rate cut in September at the Jackson Hole meeting, and Bitcoin and the overall crypto market saw a substantial increase.

According to OKX market data, at 22:00 last night, BTC first briefly broke through 62,000 USDT, and then briefly fell; within the next 8 hours, BTC surged again to break through 65,000 USDT, with the highest increase reaching 6.9%. At the time of writing, BTC is temporarily reported at 63,918 USDT, with a 24-hour increase of 3.87%.

Shitcoin, led by ETH, also performed well, breaking away from the previous "monkey market" trend and rising all the way. ETH broke through the 2,800 USDT mark, with the highest increase reaching 6.3%, currently temporarily reported at 2,754.31 USDT, with a 24-hour increase of 3.13%; SOL is temporarily reported at 153.5 USDT, with a 24-hour increase of 6.29%; ORDI is temporarily reported at 35.43 USDT, with a 24-hour increase of 10.7%; PEPE is temporarily reported at 0.000009 USDT, with a 24-hour increase of 8.25%; PEOPLE is temporarily reported at 0.0677 USDT, with a 24-hour increase of 12.09%.

Influenced by the overall market increase, the total market value of cryptocurrencies has also risen significantly. Data from CoinGecko shows that the current total market value of cryptocurrencies has risen to 2.35 trillion US dollars, with a 24-hour increase of 3.5%.

In terms of derivative trading, Coinglass data shows that there were liquidations totaling 181 million US dollars in the past 24 hours, with the vast majority being short liquidations, amounting to 139 million US dollars. In terms of currencies, BTC liquidated 49.4047 million US dollars, and ETH liquidated 47.8486 million US dollars.

Before Federal Reserve Chairman Powell's speech, the U.S. stock market opened higher, with the Dow rising by 0.41%, the S&P 500 rising by 0.57%, the Nasdaq rising by 0.8%, Coinbase rising by 1.03%, and MicroStrategy rising by 1.7%.

Federal Reserve Chairman Powell: The time for policy adjustment has come

The main reason for the current market increase is the positive comments made by Federal Reserve Chairman Powell on the future interest rate cut. At the Jackson Hole meeting, Powell's overall speech was dovish, stating, "It is now time to adjust the policy. The direction forward is clear, and the timing and pace of the interest rate cut will depend on future data, evolving outlook, and the balance of risks."

It is worth noting that although the interest rate cut in September was anticipated by the market, Powell had not previously indicated in formal occasions whether the interest rate cut would be officially implemented in September. This speech made the market more certain about the Fed's intention to cut interest rates after September. Therefore, the crypto market has shifted from a downward trend to an upward trend.

In fact, before Powell's speech, the market had a good expectation for the interest rate cut.

For example, the weekly report released by Matrixport stated that although the financial markets seemed calm, significant turning points may be imminent as gold, oil, government bonds, and the U.S. dollar are all approaching support levels. This situation indicates that there may be significant changes in the macroeconomy, but their impact may take several months to fully materialize. Due to the forward-looking nature of the financial markets, these changes may also bring about more significant trend changes.

Boston Fed President Rosengren stated that the Fed's policies have already had an effect, and we can start gradually returning to a normal policy stance. We cannot wait for inflation to fall to 2% before adjusting policy rates. The Fed needs to carefully consider changes in the labor market and hopes for a smooth and orderly return to normalization. The performance of the labor market indicates a gradual return to a more normal state. The Fed is "approaching" the timing of the interest rate cut, and the larger-than-expected decline in inflation justifies the early adjustment of the view on the interest rate cut.

At the same time, Atlanta Fed President Bostic stated in an interview at Jackson Hole that an early interest rate cut may be appropriate, and indicated that there may be more than one interest rate cut this year.

Before Powell's speech, according to CME "FedWatch," the probability of the Fed cutting interest rates by a cumulative 50 basis points by November was 54.2%, by 75 basis points was 38.9%, and by 100 basis points was 7.0%.

However, after Powell expressed that the policy is about to change, there was a positive change in the data from CME "FedWatch" as well. The probability of the Fed cutting interest rates by a cumulative 50 basis points by November is 43%, by 75 basis points is 45.2%, and by 100 basis points is 11.8%. The swap market remains stable, and it is expected that there will be a reduction of nearly 100 basis points in interest rates by the end of the year. Traders have increased their bets on the Fed cutting interest rates after Powell's speech.

The market is more optimistic about the expansion of the interest rate cut, with the probability of a cumulative interest rate cut of more than 75 basis points by November continuously increasing. Several research institutions and media outlets have expressed their views on the extent of the Fed's interest rate cut this year:

• The Wall Street Journal revealed that Fed Chairman Powell has sent the strongest signal of an interest rate cut to date, indicating that the Fed intends to take action to prevent further weakness in the U.S. labor market.

• Peter Cardillo, Chief Market Economist at Spartan Capital Securities, stated that Powell's speech takes a dovish stance and believes that the Fed will cut interest rates by 50 basis points in September, and there will be two interest rate cuts this year.

• Uto Shinohara, Managing Director and Senior Investment Strategist at Mesirow, stated that Powell has confirmed the market's expectation of an interest rate cut in September, while continuing to emphasize data dependence and future economic prospects. The expectation for the September meeting is still around 30 basis points, and the total expectation for interest rate cuts this year has only increased from around 95 basis points to the current 100 basis points.

• Fed's Harker stated that we need to start cutting interest rates. The Fed should start the process of cutting interest rates, and this process should continue.

• Steve Englander, Global Head of FX Research and Macro Strategy at Standard Chartered Bank, stated that a 50 basis point interest rate cut is not the first step, and if the labor market continues to weaken, the Fed's interest rate cut may come soon.

• Former Fed economist Claudia Sahm pointed out in an interview that there is strong evidence supporting a 50 basis point interest rate cut. Doing so will help the Fed "recalibrate" and help stabilize the unemployment rate, which has become too low.

• Gita Gopinath, Chief Economist of the International Monetary Fund (IMF), stated that the Fed's upcoming interest rate cut plan is "consistent" with the IMF's recommendations.

The views of the above institutions tend to indicate a 50 basis point interest rate cut by the Fed in September, but there are also a few institutions expressing different views, such as:

• Stephen Stanley of Santander Bank pointed out that Federal Reserve Chairman Powell emphasized the importance of the upcoming August employment data for the monetary easing cycle at the Jackson Hole meeting, making this data more critical than the August core CPI, especially against the backdrop of sluggish job growth in July. If the August data is stronger, it may weaken the expectation of a 50 basis point rate cut next month.

• Economists at Bank of America stated in a report that although Powell's tone at the Jackson Hole meeting was dovish, the Fed's concern about the cooling labor market still suggests that a 25 basis point rate cut in September is more likely than a 50 basis point cut, unless there is a very weak employment report.

Currently, after Powell's speech, the market has gradually shifted from discussing whether there will be an interest rate cut to predicting how many basis points the rate will be cut by. This is exactly why the financial market needs to continuously speculate on market trends through building expectations. The overall rise in the crypto market early this morning is also driven by the expectation of how many basis points the interest rate will be cut.

The view on whether the Fed will cut interest rates by 50 basis points or maintain a 25 basis point cut remains unchanged, and it is important to focus on the August employment data to be released on September 6, which may be the next important turning point for the crypto market.

Interest rate cuts are a foregone conclusion, and the next narrative will focus on the U.S. election.

There have been many events affecting the crypto market this year, including Bitcoin and Ethereum spot ETFs and the Fed's interest rate cuts. Currently, there are corresponding comments or events confirming their targets. This year, the U.S. election may be the only major event that will ultimately affect the market.

Polymarket's data on the probability of winning the U.S. election shows that the probability of Trump and Harris is neck and neck. As of the time of writing, Trump leads Harris by a slight margin of 1%.

However, today, independent U.S. presidential candidate Robert F. Kennedy Jr. has withdrawn from the race. He stated that he will support former U.S. President Donald Trump, and will suspend, rather than terminate, his campaign and remove his name from the ballots in 10 key states.

This may continue to increase Trump's chances of winning. With Trump's favorable comments on cryptocurrencies, Trump's presidency is likely the election result that the crypto industry most wants to see.

Tom Lee, co-founder of Fundstrat, stated in an interview with CNBC that the hope of Trump winning the November election may boost asset prices, including Bitcoin. The market currently believes that the likelihood of Trump winning is higher than what the polls show, and sees this as a good thing.

Bernstein Research, a research firm at Bernstein, released a report stating that the cryptocurrency market, especially Bitcoin, may undergo a major transformation based on the upcoming results of the U.S. presidential election. A potential victory for Donald Trump may catalyze a bottoming out of Bitcoin prices, leading to an increase in the prices of major cryptocurrencies. Bitcoin prices will only rebound when the crypto market becomes interested in the possibility of a Republican victory, as the crypto market continues to interpret a Republican victory as a favorable factor for crypto policies.

On the other hand, if Harris wins, it may lead to a decrease in crypto market prices due to Trump's loss not meeting expectations, resulting in a downward trend in prices. However, analyst Jaret Seiberg of TD Cowen pointed out in a report that compared to the current Biden administration, a presidency by Kamala Harris may be more favorable for cryptocurrencies. Jaret Seiberg also predicted that a Harris administration may support investor protection efforts, retaining the SEC's role in regulating tokens and trading platforms, and the investor protection measures under a Harris administration may even be slightly stricter than those under a Trump administration.

However, whether Trump wins or Harris wins, the pace at which the crypto industry is gradually integrating into mainstream finance will be unstoppable. Perhaps from a future perspective, 2024 will be seen as the most important milestone in the development of the crypto industry.

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