Editor's Note: This article comes fromStar Media STARMEDIA (ID: Star_Media1), Author: Xianyu, reproduced by Odaily with authorization.

Editor's Note: This article comes from

Star Media STARMEDIA (ID: Star_Media1)

, Author: Xianyu, reproduced by Odaily with authorization.

Many central banks around the world are signaling that they will actively cushion the impact of the new coronavirus epidemic on the global economy.

On the evening of Tuesday (March 3) Beijing time, the Federal Reserve on the other side of the ocean announced an emergency interest rate cut of 50 points, which became the biggest news today besides the epidemic. The first step towards loss.

secondary title

Under the impact of the epidemic, the United States "panicked" first

U.S. President Donald Trump called on the Federal Reserve to cut interest rates sharply on Tuesday, saying higher borrowing costs made life difficult for U.S. exporters and put the U.S. economy at a disadvantage. Trump has repeatedly criticized Fed Chairman Jerome Powell in recent days, saying the central bank is keeping interest rates too high. He had tweeted the day before that the Fed was "slow to act" and should have acted more aggressively.

Wall Street was not surprised by this. Analysts widely expect the Fed to cut interest rates again at the March monetary policy meeting two weeks later and continue to cut interest rates in April. The Fed will continue to take more actions to ease the public health emergency. Threats to U.S. economic growth.

"The question now is how the Fed will continue to adjust monetary policy next. After the economic outlook changes, the Fed's further actions may be appropriate, and the Fed's communication with the market may become difficult in the next few months. Even if the public health emergency The impact has not been reflected in the economic data and the market still needs to see more action from the Fed."

The Fed may still cut interest rates in March and April

Citigroup expects the Fed to either cut interest rates by another 25 points on the March rate decision, or cut interest rates by 25 points on the March and April rate decisions. Bank of America Merrill Lynch expects the Fed to cut interest rates by 25 points each in March and April.

"Further rate cuts by the Fed could be more controversial as some Fed members want to see the effect of a 50 basis point rate cut, but weaker U.S. economic data and further tightening financial market conditions are likely to keep the Fed cutting rates further" Citigroup US Economist Andrew Hollenhorst said.

Fed's emergency rate cuts

The Fed's last emergency rate cut operation dates back to October 8, 2008, when the reason for the rate cut was that the collapse of Lehman Brothers raised concerns about an economic recession.

In the 11 years since then, the Federal Reserve has not taken similar actions again. Therefore, the Fed’s announcement of an emergency rate cut this time may mean that the Fed’s internal assessment of the current risk status has reached a certain level.

secondary title

Traditional funds "anxiety is obvious, what will happen to Bitcoin?

When the market is anxious, the first reaction is to look for leading targets in the familiar market. For example, the Chinese A-share market, which has performed well in the past month, and Tesla stock in the US stock market have all witnessed the surge in the capital market.

On the contrary, it is unlikely that the general public will immediately enter a completely unfamiliar and cognitively impaired new investment market, especially in the early stages of chaos and development.

So after the news was announced, spot gold soared by $20 to a new intra-week high of $1628.80.

However, the cryptocurrency market represented by Bitcoin still did not make a relatively direct synchronous follow-up during this period, and the mainstream currencies were basically flat overnight. Bitcoin also did not see follow-up feedback when obvious assets fluctuated violently.

Citing the analysis of William, a senior analyst at OKEx, he pointed out that theoretically speaking, the Fed's interest rate cut will drive the price of Bitcoin up in the medium and long term. There are two main paths for the interest rate transmission mechanism:

One: loose monetary policy → falling market interest rates → increasing bank credit → increasing global liquidity → part of the increased funds flow into the digital currency market, driving up prices

Second: loose monetary policy → market interest rates drop → dollar-denominated asset return rate drops → funds flow out of the dollar market, the dollar depreciates → some funds flow into the digital currency market, and prices rise

Of course, considering that digital assets such as Bitcoin have not yet been included in the asset allocation pool of global investment institutions, the timeliness of interest rate transmission is poor. Therefore, it is not surprising that Bitcoin has limited response to the news of the Fed’s interest rate cut in the short term. The real impact is expected It needs to be gradually revealed in the medium and long term.

Therefore, purely in terms of short-term market performance, the cryptocurrency market and the traditional financial market have once again "decoupled" in the recent period, and this relatively stable independent market performance may become a re-emergence of cryptocurrency in an unstable environment. The "passive advantage" that is concerned by market liquidity.

And another study according to The Block shows that in the past three interest rate cuts, Bitcoin's performance shows that it is not a safe-haven asset.