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Expectations for a rate cut by the Federal Reserve are increasing, and a prospect of peace is emerging in the Russian-Ukrainian conflict. Will global financial markets be affected? Should the cryptocurrency community invest now?
Data released on Tuesday evening Beijing time showed that the core Producer Price Index (PPI) in the United States for September rose by 2.6% year-on-year, while forecasts indicated an increase of 2.7%, with the previous value being 2.8%. Retail sales in the United States for September also increased by 0.2% month-on-month, whereas expectations pointed to a rise of 0.4%, and the previous figure was 0.6%. These numbers exhibit signs of a slowdown in the U.S. economy, and in this context, Federal Reserve Board member Milan stated that the U.S. economy needs a significant reduction in interest rates, as monetary policy is hindering economic development. Earlier, Federal Reserve official Daly expressed her support for a rate cut at the next Federal Reserve meeting.
Currently, the market is betting on an increased likelihood of the Federal Reserve cutting interest rates. According to the "Federal Reserve Watch" by CME, the probability of the Federal Reserve cutting interest rates by 25 basis points in December has risen to 84.7%, while the probability of keeping interest rates unchanged is 15.3%.
On the other hand. Following the Geneva talks between the United States and Ukraine, President Trump stated that the peace agreement between Ukraine and Russia is "very close to being finalized." In order to finalize this peace plan, Trump mentioned that he has instructed envoy Steve Witkoff to go to Moscow to meet with Russian President Putin to discuss the matter, while U.S. Secretary of the Army Dan Driscoll will also meet with the Ukrainian side to discuss the peace plan.
Affected by the two major news mentioned above and due to the need for covering speculators after the consecutive declines, U.S. stocks experienced a V-shaped recovery on Tuesday evening. At the close, the Dow Jones index rose by 1.43%, the S&P 500 index increased by 0.91%, and the Nasdaq index climbed by 0.67%. Therefore, many optimistic analysts began to promote significantly. Have global financial markets really reached the bottom? Is it time for us in the world of digital currencies to buy at the bottom?
I believe the answer is negative, based on the following three reasons:
1. The peace negotiation process between Russia and Ukraine is fraught with uncertainty. Although both sides have reached an agreement on some issues, significant disagreements remain regarding core interests. If the negotiations collapse, the conflict may escalate again, impacting global financial markets.
2. The main economic data in global economies is generally weak, increasing market concern about economic growth prospects.
In the United States, although the labor market remains stable, the PMI index for the manufacturing sector has declined for several consecutive months below the growth and contraction line, indicating a contraction in activity in the manufacturing sector. Additionally, the consumer confidence index has fallen, suggesting that consumers' expectations regarding economic prospects have become more cautious.
In Europe, the trend of slowing economic growth has become more apparent. Germany is considered the "engine" of the European economy, as its GDP growth has declined for two consecutive quarters, leading it into a technical recession. Other European countries are also facing similar difficulties, as economic growth suffers from weakness.
In Asia, the slowdown in Chinese economic growth has had a noticeable impact on global markets. As the world's second-largest economy, stable growth in the Chinese economy is essential for global financial markets. However, recent Chinese economic data has been weak, leading to a reduction in market expectations regarding the recovery of the global economy.
3. Bitcoin performance is weak. Despite two major positive factors + a significant rise in US stocks, the recovery in Bitcoin's price remains very weak and cannot effectively surpass the level of 89000, let alone the level of 90000. Additionally, trading volume during the recovery process is gradually shrinking, indicating weak demand. The MACD indicator on the four-hour chart suggests a contraction of the red candles, warning of further declines in the future. Once the recovery of US stocks ends and another drop appears, Bitcoin may face pressure again to test the support strength at 80000.
💡Operational advice: Be cautious when buying, small-sized sell positions can be opened, place the stop-loss point above 91000.