The outlook for Dogecoin is bullish: the Federal Reserve is flying a big dove, wildly hinting at interest rate cuts

https://tw.news.yahoo.com/fed%E5%88%A...

https://udn.com/news/story/6811/7639691

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This news was published on December 14, 2023, Taiwan time
The title is: The outlook for Dogecoin is bullish: The Federal Reserve is flying a big dove, wildly hinting at interest rate cuts

The U.S. Federal Reserve (Fed) has recently turned dovish, indicating that it will cut interest rates multiple times in the future. This news quickly inspired the stock market, especially the Dow Jones Industrial Index, which rose sharply and once exceeded 37,000. point, hitting a record high. The Federal Reserve currently maintains its benchmark interest rate at 5.25% to 5.5%, but in the latest Federal Open Market Committee (FOMC) meeting, it hinted that it will implement three interest rate cuts next year, with each cut of 0.25%. This policy change exceeded market expectations.

This good news reflects the Federal Reserve's cautious attitude towards the current economic conditions, and also shows expectations for possible future monetary policy easing. Against the backdrop of slowing inflation data, investors' optimism about the Fed's future policies has further increased. The latest inflation data, including the annual growth rate of the Producer Price Index (PPI) and Consumer Price Index (CPI), slowed to 3.1%, further supporting market expectations for interest rate cuts.

In the stock market, in addition to the sharp rise in the Dow Jones Industrial Average, the S&P 500 Index and the Nasdaq Composite Index rose 22.6% and 40.8% respectively. Technology and utility stocks both performed well, and the overall market was trending higher. Small-cap stocks also performed strongly after the Federal Reserve lowered its inflation forecast, with both the Russell 2000 Index and the S&P Small Cap 600 Index recording significant gains.

The FOMC meeting and Federal Reserve Chairman Powell's dovish stance had a significant impact on the financial market. The S&P 500 index rose by 1%, the 2-year government bond yield fell by 25 basis points to 4.5%, and the US dollar fell to August new low since. This shows market expectations for significant monetary policy easing over the next 12 months. Overall, the latest policy trends from the Federal Reserve have injected new vitality into the market, and investors are optimistic about the future outlook. Institutions such as UBS predict that during the period of slowing economic growth, high-quality stocks and bonds may rise more than average value.

In this news, we can analyze the price trend of Dogecoin from the following perspectives:

1. The impact of US dollar depreciation on Dogecoin: Interest rate cuts usually put depreciation pressure on the US dollar. We have observed in the past that dollar weakness tends to correlate with strength in cryptocurrency markets. For example, in the second half of 2020 and into early 2021, the decline in the U.S. dollar index coincided with a sharp rise in the cryptocurrency market. Therefore, current interest rate cut expectations may lead to further depreciation of the US dollar, thus having a bullish impact on cryptocurrencies such as Dogecoin.

2. The impact of the Federal Reserve’s dovish policies and interest rate cuts: According to historical experience, when the Federal Reserve adopts dovish policies and lowers interest rates, market liquidity will usually increase, which will stimulate investors to seek high-risk, high-return investments. target. For example, at the beginning of the epidemic in 2020, the Federal Reserve slashed interest rates to stimulate the economy, and subsequently we saw significant gains in the cryptocurrency market, including Bitcoin and Dogecoin. Therefore, current interest rate cut expectations may have a similar positive impact on cryptocurrencies such as Dogecoin.

3. The connection between the strength of U.S. stocks and cryptocurrency: The original article pointed out that U.S. stocks rose sharply, especially the Dow Jones Industrial Average hit a new high. In the past, we have observed that strong performance in the U.S. stock market has often been associated with gains in the cryptocurrency market. For example, in 2017 and 2021, the positive performance of the stock market coincided with the sharp rise in the cryptocurrency market. This suggests that the current positive dynamics in the US stock market may have a positive impact on cryptocurrencies such as Dogecoin.

Overall, as the Federal Reserve turns dovish and signals interest rate cuts, the U.S. dollar is likely to depreciate, driving up the price of cryptocurrencies, including Dogecoin. Increased market liquidity and the strong performance of U.S. stocks may also further stimulate demand for riskier assets, which will have a positive impact on cryptocurrencies such as Dogecoin. Based on the above factors, this channel believes that this is the golden moment for long-term investors to accumulate chips and plan for the future. However, it must be emphasized that these views we share are not professional investment advice. They are only based on our observations and analysis. If you have any questions about our interpretation, we recommend that you refer to the source news link attached in the information column. For further verification, it is crucial for investors to do their own homework. Please remember to never invest in something you do not understand, never invest in a position that you cannot afford to lose, and make investment decisions carefully. . Of course, we will continue to pay close attention to the latest developments in Dogecoin.