The Federal Reserve is not raising interest rates, so can the market breathe a sigh of relief?
Not necessarily.
On October 29 (Eastern Time), the Federal Reserve maintained the federal funds rate at 3.75%—4.00%. Regarding whether to adjust rates in December, Waller did not provide a clear answer, only stating that future actions will depend on economic data.
Next, whether U.S. inflation can continue to cool and whether economic growth will slow down will affect the market's judgment on interest rate cuts. For friends who are new to the financial market, two key questions can be considered first.
1. The U.S. economy is still doing well; why is the Federal Reserve in no hurry to cut rates?
The U.S. economy still shows resilience. This speech mentioned that the GDP growth forecast for the first half of the year was raised from 1.8% to 2.4%, with consumer spending expected to grow by more than 3%, and corporate investment maintaining a relatively fast growth rate.
However, inflation remains above the Federal Reserve's 2% target, and energy prices have recently risen again. With the economy not showing significant weakness and prices not fully stabilizing, it is naturally difficult for the Federal Reserve to easily shift towards easing.
If inflation continues to remain high, expectations for rate cuts may cool; if employment and consumption significantly weaken, market expectations for rate cuts may heat up.
Therefore, pausing rate adjustments does not mean that rate cuts are just around the corner. When looking at the Federal Reserve's news, one must pay attention not only to rate decisions but also to the underlying economic data.
2. AI investment is so hot; why focus on interest rates?
Waller mentioned in his speech that interest rates still affect AI investment.
Even if companies are optimistic about the long-term prospects of AI, they must consider financing costs and whether the invested money can yield corresponding returns. High interest rates may increase financing pressure and affect how companies allocate funds.
Next, observe the financial reports from tech companies like Microsoft and Google; in addition to revenue and profit, pay attention to AI-related capital expenditures and whether these investments can translate into actual returns.
If companies continue to increase investments but profits do not keep pace, the market may reassess the valuations of related companies; if performance can support high investments, market confidence may be solidified.
Thus, when observing trends in AI, one should not only focus on technological advancements but also on company investments and returns.
3. What does this have to do with the crypto market?
The Federal Reserve's policies will affect the U.S. dollar, U.S. Treasury yields, and market risk appetite, which will also impact the crypto market.
In simple terms, if interest rates remain high for an extended period, some funds may approach volatile assets like Bitcoin more cautiously; if the market begins to anticipate rate cuts, risk appetite may improve.
However, this does not mean that if the Federal Reserve does not cut rates, Bitcoin will certainly decline; nor does it mean that if expectations for rate cuts rise, Bitcoin will necessarily increase.
Market trends are also influenced by trading activities, capital flows, and leverage. For example:
● Spot Trading: Focus on whether real buying and selling demand has increased, not just a temporary price surge.
● ETF Capital Flow: Monitor whether related investment products continue to attract capital inflows, but do not judge trends based solely on single-day data.
● Contract Leverage: The higher the leverage, the easier it is to trigger concentrated liquidations when prices fluctuate, amplifying gains and losses.
Combining these signals offers more reference value than simply judging price movements based on a single piece of Federal Reserve news.
One more point to note: how prices move after news is also very important. If the market has already priced in an expectation, even if the news seems favorable, prices may not necessarily continue to rise.
Next, how should we observe the market?
The Federal Reserve's policies will affect the market environment, but how the actual market behaves depends on capital and price performance.
If you are new to the crypto market, there is no need to rush into predicting price movements. You can first clarify the relationship between interest rates, inflation, and market sentiment, and then observe price, trading volume, and capital changes to gauge market trends.
You can use AiCoin to check prices, trading volumes, and set price alerts to keep track of market changes. If you don't have a Binance account yet and want to learn more about trading crypto assets, you can register first to familiarize yourself with spot trading rules, fees, and related risks before deciding whether to participate.
👉 https://jump.do/zh-Hans/xlink-proxy?id=3
(Invitation Code: aicoin668, enjoy 10% rebate)
Understanding market trends is the first step; there is no need to rush into making trading decisions due to market fluctuations.
Join our community to discuss and become stronger together!
Official Telegram community:
AiCoin Chinese Twitter:
Binance Benefits Group:
https://www.aicoin.com/link/chat?cid=gmLgwvKD1
Risk Warning: This article is for informational reference only and does not constitute investment advice. Crypto asset prices are highly volatile, macro policies and market expectations may change at any time, so please make cautious decisions.
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[email protected]，本平台相关工作人员将会进行核查。
