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The Federal Reserve System is facing rare internal divisions not seen in 30 years, and this week's Federal Open Market Committee (FOMC) meeting may see the first instance of a dual board member dissenting vote. This news has already begun to impact the Crypto Assets market.
Currently, there is a divergence of opinions within the Federal Reserve: the mainstream faction led by Chairman Powell maintains a wait-and-see attitude, while Governors Waller and Bowman clearly advocate for interest rate cuts. Wall Street analysts believe that the Federal Reserve may find it difficult to continue resisting political pressure, with tensions between the two sides escalating.
If the Federal Reserve begins a rate-cutting cycle, it will have a profound impact on the Crypto Assets market. The significant interest rate hikes over the past two years have left a large amount of funds trapped in the banking system. Once rates are cut, global funds will seek new investment directions, and high-risk, high-return Crypto Assets may become an important option.
Looking back at 2019, when the interest rate cut cycle began, the price of Bitcoin rose from around $3000 to over $10,000. Although history does not repeat itself simply, similar market logic still exists: when market funds are ample and costs decrease, investors are often more willing to try high-risk investments.
The internal divisions within the Federal Reserve reflect broader market uncertainties. The indecision in policy may lead to increased market volatility, which presents opportunities for sensitive Crypto Assets investors amidst this volatility.
Investors can pay attention to the following key points:
1. Closely monitor changes in the US Dollar Index. An increase in interest rate cut expectations usually leads to a weaker dollar, and a decline in the dollar often signals a rise in Bitcoin.
2. Maintain rational position management. When the market direction is unclear, avoid blindly investing all funds, and keep a certain amount of funds to wait for a clearer market direction.
3. Pay attention to the results of this week's FOMC meeting. The Federal Reserve will announce its decision on Thursday morning Beijing time, with a focus on whether there are dissenting votes and any hints regarding the future timeline for interest rate cuts.
Overall, the internal divergences within the Federal Reserve may trigger significant changes in global capital flows. In the short term, market volatility may intensify, but in the long run, the warming expectations of interest rate cuts are favorable for the Crypto Assets market. Investors should avoid blindly chasing gains and cutting losses, but rather closely monitor market dynamics and adjust their investment strategies in a timely manner.
Currently, the Crypto Assets community has begun preparing for a potentially upcoming new round of market trends. For investors looking to seize this potential opportunity, now may be a suitable entry point. However, investors should still proceed with caution, fully assess risks, and make appropriate asset allocations.