The first US interest rate cut in around four years has noticeably impacted global markets, including stock indexes, precious metals, and crypto assets.
Impact on Crypto Markets
During the mid-London session, the crypto market cap gained nearly 2 percent in the past 24 hours to hover about $2.24 trillion on Thursday. Crypto traders celebrated the Bitcoin price rally above $62k, leading to a bullish recovery in Ethereum, Avalanche, and Solana prices. As a result, the fear of further crypto capitulation has significantly decreased in the past 24 hours, with Bitcoin’s fear and greed index hovering around 49 percent, signifying neutral trader sentiment.
Implications for Bitcoin
With the United States quantitative easing at hand, some Wall Street analysts have cautioned traders against expecting an immediate bullish continuation. According to Arthur Hayes, co-founder and CIO of BitMEX, the 50 bps Fed’s rate cut could be a ‘nuclear catastrophe’ for the financial market soon before the inevitable rally in the long haul. Hayes also believes the ongoing rate cuts in major economies point to deep issues in the financial system. Every time the Fed initiated a quantitative easing cycle with 0.5 percent in the past two decades, the overall impact was a stock market retrace in the subsequent months before the long-term bullish rebound.
Mixed Reactions from Whale Investors
According to on-chain data analysis, whale investors have opted to cool down from the previous high accumulation rate. For instance, the demand for US spot Bitcoin and Ethereum has significantly declined in recent times, with some whale investors, led by Ceffu, offloading in huge volumes.
In conclusion, the US interest rate cut has significantly impacted global markets. While the crypto markets experienced a surge, experts caution against expecting immediate growth. The reactions of major investors also indicate unusual caution during this period.
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