Early this morning, the Federal Reserve announced a 25-basis-point rate cut, and although this decision was within market expectations, it still triggered a sharp decline in US stocks, gold, and the cryptocurrency market. The Dow Jones Industrial Average (DJIA) fell 2.58%, marking its 10th consecutive trading day of declines, the longest such streak since 1974. The S&P 500 index fell 2.95%, while the Nasdaq Composite (Nasdaq) plunged 3.56%, the largest single-day decline on a Federal Reserve rate decision day since 2001. Gold prices plummeted $60 on the day.
In the cryptocurrency market, Bitcoin briefly fell below the $99,000 mark, with a daily decline of 5%. Other Altcoins and meme coins saw even more significant declines, and the total cryptocurrency market capitalization fell below $3.5 trillion, a 7.2% overall drop.
Powell's speech raises market concerns
Federal Reserve Chairman Powell clearly stated in his post-FOMC meeting speech: "The Federal Reserve is not allowed to hold Bitcoin. This is an issue that Congress needs to consider, and we have no intention of seeking to change the current law." This stance has exacerbated the selling pressure on Bitcoin, leading to a cumulative decline of nearly $8,000 over the past two days.
Is the US stock market in the "biggest bubble in history"?
Well-known investor and author of "The Ultimate Guide to Swing Trading Stocks", Steve Burns, warned that the US stock market may be in the "biggest bubble in human history". He said: "The Federal Reserve is afraid of an economic recession, so it will not restrict monetary policy. But the real risk is hyperinflation or a devaluation of the US dollar."
Burns stated that if the market experiences a 50% correction or crash, he will increase his holdings in gold and silver ETFs to hedge against US dollar risk. In addition, he is also bullish on Palantir Technologies, Reddit, Nvidia, and Rocket Lab USA, and believes that the stock charts of these companies are "extremely outstanding".
Burns emphasized: "Regardless of the trading system, position management is always the top priority. The size of the position determines whether investors can accumulate profits, preserve profits, or avoid catastrophic losses."
The future trend of Bitcoin
With Trump set to officially take office on January 20, 2025, the prospects for his proposed policy of establishing a Bitcoin national reserve are still unclear. The volatility in the US stock market may further exacerbate the fluctuations in the Bitcoin market.
Community Perspectives:
FalconX Research Head: Rate cut forecast has limited impact on the cryptocurrency market, Bitcoin's correlation with stock indices has decreased
David Lawant, Head of Research at cryptocurrency brokerage FalconX, believes that although the rate cut forecast has temporarily suppressed cryptocurrency prices, the long-term impact may be limited. "While macroeconomic factors have traditionally influenced cryptocurrency prices, specific events within the industry may become the dominant forces in the coming weeks and months, especially against the backdrop of market expectations of policy changes under the new government."
Pantera Capital Partner: Clear bottom signal for Bitcoin, optimistic outlook
IG Australia Pty market analyst Tony Sycamore's report pointed out that while the Federal Reserve's decision was unexpected, it was not entirely surprising to investors who have been seeing persistently high inflation and economic data. "The Federal Reserve's decision has become a catalyst for market correction, clearing out some of the speculative capital that flowed into stocks and assets like Bitcoin after the election."
Since November 5th, the day of the election, Bitcoin's price has risen 50% and hit a new all-time high of $108,316 earlier this week. Pantera Capital partner Paul Veradittakit said: "All signs indicate that Bitcoin has hit a bottom, and the outlook is optimistic. Even if some traders choose to take profits due to disappointment with the Federal Reserve's decision, Bitcoin's long-term potential remains promising."
"New Bond King" Gundlach: Gold and Bitcoin positions will increase, but may consolidate in the short term
"New Bond King" Gundlach expects that investment positions in gold and Bitcoin may continue to increase, but prices will remain range-bound in the short term. He added: "I won't hold Bitcoin until the new government officially takes office."
