Alphractal's analysis delves into the historical connections between interest rates, the S&P 500, and Bitcoin, emphasizing their significance for investors.
Historical Context and Market Trends
Alphractal's report examines historical events like the Dot-Com Bubble (2000-2002), Subprime Crisis (2007-2009), and the COVID-19 Crash (2020). In each case, Fed rate hikes significantly impacted the stock market, particularly the S&P 500. Bitcoin, a more recent market player, saw substantial growth during low-interest-rate periods.
Current Cycle and Its Distinctions
Since 2022, the Fed has aggressively raised rates to combat post-pandemic inflation, but the S&P 500 has remained resilient. Alphractal attributes this to lower corporate leverage and strong performance from technology giants like NVIDIA and Microsoft. Unlike past cycles, this divergence is a concern for analysts.
Market Scenarios until 2025
Alphractal outlines three scenarios for 2025: gradual rate cuts may support market growth, an external shock could cause a sharp decline, and persistently high rates could lead to a correction. Market reactions to rate changes will depend on economic conditions.
Interest rates remain a crucial factor in assessing the prospects for Bitcoin and the S&P 500. Future Fed decisions will profoundly influence their trajectories.
