Although volatility continues on a global scale, we have not seen a sharp sell-off period like the one we experienced last month. Such volatility is normal before Fed meetings, but what is coming is not just an ordinary interest rate decision. There will also be a change of direction. Fed policy will ease, and this has always been something that has triggered volatility in the past.
Macroeconomics Summary
The data on the US labor market brought disappointments about the Fed and the US economy. The cooling economy and the slow pace of the Fed increased concerns. Then we saw stocks suffer their worst weekly sell-off since March 2023. A Prize Pool Worth 21 Million TL Awaits You from BinanceTR! Participating and winning has never been easier.. You can sign up to BinanceTR from this link. Get your first crypto!
What happened last year? We saw that the rapidly rising discount rates triggered bankrun-like events in some banks in March. Drops of up to 80% had become normal in these banks.
The S&P 500 fell 1.7% and the Nasdaq 100 fell 2.7%, while August employment growth fell 23,000 short of estimates. The 2-year Treasury yield fell 15bp Fed‘s Christopher Waller said he was “open” to the potential for a bigger rate cut. Markets are now strongly pricing in the possibility of a 50bp cut.
The excitement of a 50bp cut did not last long as the cooling signals in the economy, which supported recession concerns and the potential for the Fed to make things worse by acting quickly, suddenly hit minds like lightning. Non-farm employment It increased by 142,000 last month, making it the lowest level since mid-2020 on a 3-month average.
The market reaction to the previous employment data was worse, but S&P 500 lost more than 1.5% for the first time in the last 12 years for 2 consecutive days (business days). While Oil and Gold fell, Bitcoin $54,380.21 It lost nearly 6 percent yesterday.
What Will Happen to Bitcoin (BTC)?
What a week, wasn’t it? Especially the last 2 days were like a storm, but BTC It managed to stay above $52,000. Some of our predictions for today last year did not come true. For example, it was not expected that the Fed would keep interest rates at the ceiling for such a long time, over a year. However, we mentioned that volatility could increase suddenly before the Fed cut interest rates, namely with the policy change from tight monetary policy to loosening stance.
This chart shows what happened to the S&P 500 index after the 2020 rate cut. Markets rise in anticipation of the cut and fall as policy reverses 180 degrees. The same thing happened in previous rate hike reversals.
So what will happen to Bitcoin? Look at the chart again, maybe we can see a deeper bottom with interest rate cuts. September is already suitable for this. However, towards the end of the year, as the transformation in politics is digested, the real bull run may begin. In 2020, the S&P 500 offered almost 100 percent return on the index scale to patient investors. This also supports the BTC bullish story for the last quarter.
Disclaimer: The information contained in this article does not contain investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
