Market Update - September 20th 2024
On Wednesday, the FED opted to cut interest rates by 50 basis points, which came as a surprise to some who were expecting a less proactive 25 basis point cut. In theory, this aggressive move is good for stocks and risk assets alike, yet underpinning this decision are growing concerns from different camps, ranging from a possible reignition of inflation, as well as on the other side, of a deteriorating labour market. What is clear is that a fine balance needs to be achieved over the next few months in order for the Fed to achieve their dual mandate without hitches.
Powell’s press conference indicated his concerns are now more focused on the labour market. We are encouraged by the FED's more proactive approach in supporting the labour market before it weakens too rapidly. The new FED dot plot shows they expect to cut another 50 basis points by the end of the year.
On the crypto front, Spot Bitcoin ETFs recorded inflows totaling over $450 million the week prior, likely driven by anticipation of the FED's interest rate decision, marking a sharp contrast to the outflows seen the week before.Overall, we view this shift in monetary policy as being a long term supportive factor for Bitcoin and the broader crypto market, regardless of future economic growth prospects in the US.
Read more on: etp.coinshares.com/market-activity
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