Markets were closely watching the Federal Open Market Committee (FOMC) meeting held on September 18, anticipating the long-awaited interest rate cuts.
Bitcoin Surge
Many believed the interest rate cuts were already priced in for Bitcoin. Arthur Hayes asserted that such actions by the US Fed would negatively impact the market in the long-term, but the short-term showed a positive trend for BTC's price. The asset had already jumped from $57,600 to $60,000 a day prior and went on a rollercoaster after the Fed made it official with a 50 basis point cut. In the first few hours after the announcement, BTC experienced several instances of volatility. 12 hours later, when the dust settled, Bitcoin's price was nearly 3% higher than the previous day and was up by 7% on a weekly scale. The asset peaked at $62,500 earlier today but then retraced to around $60,000. Most altcoins followed suit, and the total crypto market cap increased by around $100 billion overnight. Liquidations surged to $200 million on a daily scale, mostly dominated by shorts. Naturally, BTC led with $75 million in liquidated positions, followed by ETH at $35 million.
Stocks Decline, Gold Volatile
Even the precious metal showed heightened volatility after the rate cut, climbing from $2,550/oz to a new all-time high of $2,600 before retracing to $2,545 and settling at $2,567. The US stock market mirrored this volatility, initial gains were posted but later saw minor declines. The S&P 500 opened the trading day at 5,641, spiked nearly to 5,680, but closed at 5,618. Nasdaq Composite had a similar movement, from 17,663 to over 17,800 and concluded at 17,573. The Dow Jones Industrial Average was a bit less volatile and ended the day with a minor loss.
Future Outlook
Although it is early to make grand conclusions, the first 12 hours show that riskier assets like cryptocurrencies have benefited from the Fed's rate reduction so far. However, time will tell whether this move will indeed turn out to be bullish or if Arthur Hayes' concerns will prove valid.
Markets continue to analyze the consequences of the Fed's rate cut. Observing the further development will help understand the impact on various asset classes.
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