The Fed Keeps Interest Rate Unchanged, Global Follow Japan's Rate Hike

This month, the Fed's FOMC meeting decided to maintain the Intrerest Rate unchanged, while raising future GDP expectations and lowering inflation expectations. Japan's first interest rate hike in 17 years has drawn global attention, but the upcoming interest rate cut cycle by the Fed may alleviate liquidity concerns. European investors are also betting on interest rate cuts. The cryptocurrency market is undergoing a short-term adjustment, but supply-side analysis indicates that there is still sufficient upward momentum for the future.

On March 20, the Fed announced its interest rate decision, keeping the federal funds rate target range unchanged at 5.25% to 5.5%. Despite the CPI data for February being slightly higher than expected, the Fed chose to stand pat. This marks the third consecutive time the Fed has maintained the interest rate, and the market generally believes that the rate hike cycle has ended.

The Fed raised its GDP growth forecast for 2024 to 2026 and lowered its unemployment rate forecast for 2024. Regarding interest rate cuts, the Fed stated that there is currently no need, and it may consider it only after signs of weakness in the labor market.

The performance of the US manufacturing sector continues to be followed. In March, manufacturing activity recorded the largest increase in nearly two years, with production, employment, and price indicators all accelerating. This reflects the strong performance of manufacturing in the current economic environment, but it still needs to be assessed in conjunction with other indicators.

The Bank of Japan announced its first interest rate hike in 17 years, raising concerns in the market about tightening international liquidity. However, analysts believe that the impact of Japan's interest rate increase on the market may be more psychological. International capital had already anticipated this, and the upcoming rate cut cycle by the Fed is expected to alleviate liquidity concerns.

The three major U.S. stock indexes reached new highs this month, but some investors have started to take profits. AI-related stocks remain the market focus, and although there have been fluctuations, the overall enthusiasm persists. European stock markets performed strongly, and investors are also betting on interest rate cuts.

The crypto market has experienced significant volatility this month. After reaching a historical high, the price of Bitcoin has seen a correction. The capital flow of spot ETFs has a significant impact on the price of Bitcoin. On-chain analysis shows that high-net-worth investors have not significantly reduced their holdings during the correction, while retail investors are the main force behind the sell-off.

From the supply-side perspective, the Bitcoin halving has a significant impact on the long-term price trend. As mining costs rise and value recognition increases, the price of Bitcoin is expected to stabilize long-term at a level above mining costs.

Ethereum has been reclassified as a security by the SEC, but the CEO of BlackRock stated that there is still a possibility of launching an Ethereum ETF. Currently, multiple institutions have submitted applications for Ethereum spot ETFs to the SEC, with a final decision to be announced in May.

Overall, despite short-term fluctuations and uncertainties, global investors' expectations for a rate cut cycle continue to support market sentiment. The crypto market, while facing regulatory challenges, still has a positive long-term outlook. Investors should closely follow the policy trends of various central banks and market changes, and invest cautiously.