The fed cut interest rates by 25b bps yesterday, so WHY are markets nuking?...
Although rate cuts tend to be bullish for risk assets like bitcoin, this market crash has a lot less to do with the actual rate cut itself and more to do with the feds outlook in 2025.
The markets had pretty much priced in another 3-4 rate cuts to happen in 2025 as the fed was expecting. Yesterday, the fed shook up the pot by announcing they will be likely be more hawkish in 2025, with only 2 rate cuts. THIS is what the markets had reacted over, not the 25 bps cut itself. Markets are forward looking and tend to react to what will happen in the future, and the fed cutting less is bearish for the markets as a whole.
Risk assets performed poorly on this news. We saw the DXY hit yearly ATHs, while watching the DOW, S&P, and other indices have historically bad days. Crypto has also underperformed, having bitcoin drop over 10% from its ATHs while many alts experienced 20%+ pullbacks.
Now does this mean the bullrun is over? I don’t believe so. Although the economy is in a transitionary period, I am confident enough in the narratives of this bullrun to keep pushing us higher for a few more months. Short term with the upcoming inflation news and low liquidity during the holidays we may experience some volatility, but don't think this is the end. See this moment as a blessing for being able to buy crypto for less and keep HODLING. 🫡
Although rate cuts tend to be bullish for risk assets like bitcoin, this market crash has a lot less to do with the actual rate cut itself and more to do with the feds outlook in 2025.
The markets had pretty much priced in another 3-4 rate cuts to happen in 2025 as the fed was expecting. Yesterday, the fed shook up the pot by announcing they will be likely be more hawkish in 2025, with only 2 rate cuts. THIS is what the markets had reacted over, not the 25 bps cut itself. Markets are forward looking and tend to react to what will happen in the future, and the fed cutting less is bearish for the markets as a whole.
Risk assets performed poorly on this news. We saw the DXY hit yearly ATHs, while watching the DOW, S&P, and other indices have historically bad days. Crypto has also underperformed, having bitcoin drop over 10% from its ATHs while many alts experienced 20%+ pullbacks.
Now does this mean the bullrun is over? I don’t believe so. Although the economy is in a transitionary period, I am confident enough in the narratives of this bullrun to keep pushing us higher for a few more months. Short term with the upcoming inflation news and low liquidity during the holidays we may experience some volatility, but don't think this is the end. See this moment as a blessing for being able to buy crypto for less and keep HODLING. 🫡