Earlier we systematically talked about the impact of US stocks on the price trends of BTC and ETH, but the key time that can affect the price trends of US stocks will happen at 2 a.m. on Thursday, Beijing time, which is the Federal Reserve’s interest rate meeting. No one should doubt that the Federal Reserve will choose to raise interest rates by 25 basis points. Instead, everyone is betting on whether this will be the last time the Federal Reserve raises interest rates, and whether they can get a positive answer from Powell. Of course, no matter what Powell says , the market will think that this is the last time the Fed raises interest rates. This time we will talk about the conclusion first. Since the Fed started to raise interest rates, every game between the market and the Fed has been based on the failure of the market’s predictions, and the Fed has always insisted on own point of view.

In fact, Powell will specifically point out this point in every speech. However, since the Federal Reserve ended the first phase of interest rate hikes in 2023, the market no longer pays attention to the Federal Reserve or Powell's speeches, and speculates on Powell every time. your next move, and it's wrong every time. Since the explosion of Silicon Valley Bank, it has been predicted that the Federal Reserve will not only not raise interest rates in April, but will enter a stage of cutting interest rates in July. By April, it was predicted that 5% was already the upper limit of the Federal Reserve. Even if interest rates would not be cut in the short term, the possibility of raising interest rates again was unlikely. By June, when the rate hike was suspended, they were still betting that the Fed would not raise interest rates again in July. interest rates, and the result is obvious: the market’s predictions were wrong. Of course, this does not mean that the market prediction will still be wrong this time. After all, the interest rate hike is indeed coming to an end, and it is nothing more than the last or two times.

But don’t focus on the market’s predictions, and listen more to what Powell will say. After all, Powell’s speech does not represent himself, but the overall Fed’s will, whether to raise interest rates, whether to continue shrinking its balance sheet, or not. If it is not about maintaining financial tightening, what we say does not count, what the market says does not count, and what the US President and Congress say does not count. Only the Federal Reserve has the final say. The attitude of the Federal Reserve represents the trend of funds in the market. As we all know, the end of the BTC bull market cycle in 2021 is because of the Federal Reserve's decision to raise interest rates, which caused more funds to leave the currency market, leading to the beginning of a bear market.

Therefore, unless the Federal Reserve ends financial tightening, the free flow of funds will still move according to the trajectory set by the Federal Reserve. Of course, the rise in U.S. stock interest rates caused by AI may not necessarily be within the Fed's expectations. After all, the stock market has been making money and is not conducive to the Fed's fight against inflation. This is likely to be one of the reasons why the Fed has extended financial tightening. However, it should be noted that the end of financial tightening is There are still at least two stages of tightening. The first stage is to officially enter the suspension of interest rate hikes, which is what many investors are paying attention to today. After all, judging from historical data, suspension of interest rate hikes is often more beneficial than risky. Markets and risk markets have a very high probability of rising. After all, the currency market is also a part of the risk market.

Although we talked about the decline in synchronicity between BTC and ETH and technology stocks, this is due to insufficient market funds and more funds are needed to game for safer and more stable growth. Once this hole is opened, high synchronicity will be restored. It should be inevitable. In addition to the period of suspending interest rate increases, there will be a period of interest rate cuts. During this stage, the risk market will be very volatile, and there may even be a gold pit. Judging from historical data, after entering the interest rate cut cycle, the risk market will fall more than it rises. The opportunity is even greater. Many Wall Street institutions are waiting for this opportunity to hunt for the bottom. For the currency market, this may also be a rare opportunity to hunt for the bottom. After these two stages are passed, the Federal Reserve will restore the interest rate to below 0.5%, or even zero interest rate, which will truly end the financial tightening, and it is likely to enter the stage of water release, and the current time is estimated to be 2025.

The key today is obviously the game of whether this is entering the third stage of raising interest rates with the Federal Reserve, that is, the stage of suspending interest rate increases. The expectation given by JP Morgan is that as long as the Federal Reserve does not clearly explain, there will be another increase. If the rate rises, the S&P 500 may rise from about 0.25% to 0.75%. This value depends on whether Powell's speech is strong. If Powell makes it clear that there is a possibility of another interest rate hike, the S&P 500 may rise. fell 0.5% to 1%. Of course, we can just take a look at this forecast value. There is no need to take it too seriously. However, what can be expected is that if the Federal Reserve really enters the stage of suspending interest rate increases, the minimum short-term increase in the overall risk market will be Inevitably, the same is true for BTC and ETH.

In terms of the stock market, although yesterday Wilson of Morgan Stanley, a big short seller, admitted that he was wrong about being bearish, and the recent strength of AI and the hot labor market have made the market believe that the Fed can indeed achieve a soft landing, so that it is very likely that the Fed will achieve a soft landing. For a long time, no one has publicly discussed the possibility of economic recession, but the current economic data is not as prosperous as the U.S. stock market and the job market. With the expectation of this interest rate hike, the Federal Reserve raised interest rates to 5.5%, and institutions began to of investors believe that rising interest rates have led to a significant increase in the possibility of entering a recession in 2024, and that the Federal Reserve is likely to have to accelerate its plan to cut interest rates due to the economic recession, although the market is already betting that the Federal Reserve will cut interest rates in total in 2024 130 basis points,

Among them, Sherman, deputy chief investment officer of asset management company DoubleLine, said that the current U.S. economic recession indicator from the New York Fed hit a 40-year high in June. And one signal to watch now is rising defaults within the market for loans that are floating-rate and are feeling the full impact of the Fed's rate hikes, compared to the fixed-rate market that has time before rates reset. Even Moody's Investors Service said default growth among global speculative-grade companies is expected to reach 5.1% next year, up from 3.8% in the 12 months to June. In the most pessimistic scenario, it could jump to 13.7%, surpassing levels reached during the 2008-2009 credit crisis.

So don’t think that just because the U.S. stock market has gone out of the bull market during the Fed’s interest rate hike cycle, the Fed is useless and will not have an impact on the risk market again. But in fact, the effect of raising interest rates lies more in raising interest rates, and maintaining high interest rates is It is the biggest blow to the economy. Even friends in the currency market should pay more attention to the Federal Reserve's decision and formulate their own investment plans.