As the Federal Reserve prepares for its rate decision, Wells Fargo analysts urge investors to look beyond the debate over a 50 basis point (bps) versus 25bps cut, describing it as "noise."
Instead, the bank says investors should focus on the forward guidance provided by the Fed, which will help shape market expectations and guide investment decisions.
"The Fed needs to provide more certain communication on forward guidance," the analysts write, adding that clearer communication will enable individuals and firms to plan better and avoid the need for excessive accommodation later.
With market futures implying a 66% chance of a 50bps cut and a 34% chance of a 25bps cut, Wells Fargo notes that neither outcome would come as a shock.
"Afternoon fireworks [are] unlikely," they state, referencing the minimal market reaction to similar rate cut scenarios in 2001 and 2007.
One key metric to watch, according to Wells Fargo, is the 2-year U.S. Treasury yield.
"For this easing cycle, our advice is the same," they say, recommending investors track the 2-year yield to gauge the Fed's path. Depending on the Fed's approach, the federal funds rate could reach 3.875% by either January or May 2025.
Lower rate volatility, driven by a clearer Fed path, could benefit mortgage spreads and consumers, with Wells Fargo noting that this "should reduce uncertainty and ultimately spreads."
They highlight home improvement stocks such as Home Depot (HD) and Lowe's (LOW), which have begun to rally, suggesting the start of a "bigger move" for the sector.
The bank also dispels fears of a repeat of 2001 or 2007, noting that credit spreads remain tight and liquidity is abundant, indicating limited risk-aversion trade.

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What is the Federal Funds Rate?
The Federal Funds Rate (FFR) is the interest rate at which banks lend reserve balances to each other overnight in the federal funds market. As such, the FFR is a vital monetary policy tool used by the Federal Reserve to control the money supply and is typically used to influence interest rates throughout the economy.
Application of the FFR in the broader economy
The FFR serves as a powerful monetary policy tool for the Federal Reserve to influence economic conditions. By adjusting the FFR, the Fed can potentially achieve a variety of goals.
Stimulating economic growth
When the Fed lowers the FFR and cuts rates, it becomes cheaper for banks to borrow money. This encourages them to lend more to businesses and consumers, stimulating business investments and spending. Lower interest rates also tend to make borrowing more affordable and attractive for individuals and businesses, leading to increased demand for goods and services. This increased borrowing and lending ultimately contributes to greater growth, since the expansion of businesses requires them to hire more workers.

Curbing inflation

To combat inflation, the Fed can raise the FFR. This makes business loans more expensive, discouraging spending and demand for overall business expansion. Higher interest rates can also make large ticket purchases more expensive in the long run because of higher borrowing costs. This can help to reduce inflationary pressures and keep rising prices under control.

Maintaining financial stability

By carefully tweaking the FFR, the Fed can help to prevent economic recessions and attempt to achieve a soft landing for the overall economy. If the economy is overheating and inflation is rising, the Fed can raise interest rates to prevent a bubble from forming. Once the economy begins slowing down, the Fed can lower interest rates to stimulate growth. And beyond economic recessions, the FFR can also influence the risk of credit defaults. When interest rates are low, there’s a higher risk of borrowers defaulting on their loans because of the overly attractive borrowing rates. The Fed can help to manage this risk of incurring bad debt by gradually raising interest rates as the economy strengthens.

Now that you’re aware of how the Federal Reserve can influence the broader economy through the Federal Funds Rate, let’s look deeper into the potential impacts that a rate cut could have on the crypto market.
Why is the Fed lowering interest rates?

To understand Fed rate decisions and why the Federal Reserve has held off on interest rate cuts for so long, it’s key to first grasp the string of events that led the US economy to its current situation.
A recap of what led to record-high inflation levels in the US

Following the pandemic, the US economy experienced a surge in inflation, primarily driven by supply chain disruptions, increased consumer demand, and government stimulus checks. Upon confirmation that inflation wasn’t transitory, the Federal Reserve implemented a series of aggressive interest rate hikes to combat inflation and keep it headed towards their ideal target of 2%. The Fed sought to slow down economic activity and ease inflationary pressures by hiking the FFR to levels previously seen during the dot-com bubble. The higher interest rates eventually began to impact economic growth, leading to concerns about a potential recession.
Too high for too long?

While “higher for longer” has been the approach of the Fed, given the overall stubbornness of inflation levels, it seems that new data might change the situation. Despite stellar earnings reports from top tech companies that highlight the strong growth of the US economy, unemployment numbers are slowly creeping upwards. This begs the question: Is the economy in trouble after an extended period of high rates? With recession signals like the Sahm rule going off, fears that the economy might be slowing down more than previously anticipated have increased.
Potential implications of FFR cuts

Lower interest rates can stimulate economic growth by encouraging consumption and borrowing. However, it’s essential to consider the potential risks and trade-offs, such as increased inflationary pressures, market volatility, and the long-term economic outlook. While FFR cuts can boost the economy, they could also potentially exacerbate inflation. More generally, the long-term effects of FFR cuts on the global economy are notoriously difficult to predict.

The Federal Reserve’s alleged intention to lower interest rates is a significant development with far-reaching implications. While the intention is to stimulate economic growth and prevent a recession, it’s crucial to monitor the potential risks and trade-offs associated with this monetary policy change.
Understanding the inverse relationship between interest rates and crypto

Many traders believe that the relationship between interest rates and cryptocurrencies is inversely related. This means that when interest rates go down, the value of cryptocurrencies tends to go up. Conversely, when interest rates rise, crypto prices often experience a decline. Curious as to why this would be the case? This relationship is a result of the following factors.

Opportunity cost: When interest rates are cut, traders often shift their funds from lower-yielding traditional assets like bonds to riskier assets like cryptocurrencies for the chance of achieving greater gains. This increased demand can potentially drive up crypto prices.

Increased risk-on behavior: A lower FFR can whet the risk appetite of traders and get them to take on leverage because of the cheaper cost of borrowing. This can positively impact overall market sentiment and benefit crypto traders.

Improved market sentiment: A low interest rate environment often creates a more optimistic market sentiment, which can benefit cryptocurrencies given that they’re generally perceived as risky and volatile assets to trade.

Correlation with TradFi markets: As established with our Bitcoin and S&P 500 comparison, crypto often exhibits a correlation with TradFi markets. When the stock market rises due to lower interest rates, the crypto space may also experience a bullish rally because of the knock-on upward momentum.

Favorable regulatory environments: In some cases, lower interest rates can lead to more favorable regulatory environments for cryptocurrencies. For example, during the pandemic, many countries around the world implemented significant economic stimulus measures, including lowering interest rates. In response to the economic downturn and the need for job creation, several governments took a more lenient approach towards regulating cryptocurrencies as some countries relaxed KYC requirements, reduced capital gains taxes on crypto trades, or even established regulatory frameworks to provide regulatory clarity for crypto businesses.

It’s important to note that the relationship between the FFR and the crypto market is nuanced and influenced by various factors. While a lower FFR can potentially create a favorable environment for cryptocurrencies, other factors such as market sentiment, technological advancements, and regulatory developments also play a significant role in determining crypto prices.
Historical analysis of interest rate cuts and Bitcoin prices

To better understand what might happen to crypto prices when interest rates are cut in 2024, let’s examine some key historical events and gauge the performance of the crypto market when the Fed proceeded with rate cuts. In these examples, we’ll be using Bitcoin prices as a symbol of crypto market strength.
Effective Federal Funds Rate vs BTCUSD price

The 2008 Global Financial Crisis

Following the Global Financial Crisis, the Federal Reserve implemented a series of aggressive interest rate cuts to stimulate the economy. As Bitcoin only emerged in late 2008 as a response to the banking inefficiencies highlighted in the 2008 disaster, we can use the stock market as a proxy for the performance of risky assets during a series of interest rate cuts. From 2007 to late 2008, the FFR plunged from 5.25% to 0.25%. This dramatic decline in interest rates coincided with a significant downturn in the stock market. As a broad measure of US stock market performance, the S&P 500 index declined by over 50% during this period. It’s important to note that while the stock market experienced a significant decline during this period, Bitcoin was still in its early stages of development. Its performance may not have been directly correlated with the stock market at this time. However, the broader trend of traders seeking higher-yielding assets in a low-interest rate environment could have theoretically contributed to Bitcoin’s growth.
2020 COVID-19 pandemic

In response to the economic downturn caused by the pandemic, the Federal Reserve implemented aggressive monetary policy measures, including lowering interest rates to near-zero levels and providing stimulus checks. These measures aimed to support the economy and prevent a deeper recession. The combination of low interest rates and stimulus spending created a favorable environment for risk-taking and aggressive trading. This contributed to a substantial rally in the asset market, including cryptocurrencies. In particular, Bitcoin experienced a significant price surge, reaching all-time highs in late 2021.

While these historical examples provide valuable insights, it’s crucial to remember that the cryptocurrency market has evolved significantly since its early days. Factors such as increased institutional adoption, technological advancements, and regulatory changes have influenced the relationship between interest rate cuts and crypto prices. Utimately, the inverse relationship between interest rates and risky assets is certainly more nuanced with these factors thrown into the mix.
Assessing the impact of 2024 interest rate cuts on crypto prices

To evaluate the potential impact of 2024 interest rate cuts on crypto prices, let’s consider the following factors.
Economic conditions

The overall existing health of the economy will significantly influence the effectiveness of interest rate cuts. As it typically takes a while for monetary policy changes to take effect, we can look at macroeconomic factors like Gross Domestic Product levels, the Personal Consumption Expenditure price index, and unemployment levels, since these data points tend to be bellwethers of the economy and often influence the policy direction that the Fed decides to take.
Market sentiment

Trader sentiment and risk appetite can play a crucial role in determining how crypto prices respond to interest rate cuts. While FFR cuts are often seen as bullish because of their short-term implications, bearish factors like geopolitical instability or regulatory restrictions can moderate the impact of interest rate cuts on the crypto market. On the other hand, positive market sentiment that’s driven by bullish factors like economic growth and technological advancements can amplify the positive impact of interest rate cuts on crypto prices.
Institutional adoption

What’s different with this cycle of interest rate cuts is the fact that there’s increased institutional adoption to take into account. Thanks to the introduction of spot BTC ETFs and spot ETH ETFs, big-name institutions that once had to sit on the sidelines can now actively gain exposure to crypto through these traditional investment vehicles. This ultimately provides a more stable foundation for the market and potentially levels out the drastic impact of interest rate cuts since institutional traders often have a longer-term perspective and may be less likely to react to short-term market fluctuations cause by FFR cuts.

While it’s difficult to predict the exact impact of 2024 interest rate cuts on crypto prices, historical data and current economic conditions suggest that lower interest rates could create a favorable environment for cryptocurrencies. However, the specific outcome will depend on the interplay of various factors, including those mentioned above.
Implications of interest rate cuts for new crypto traders

For new traders entering the crypto market, understanding the potential implications of interest rate cuts is crucial. Here are some key points to consider if you’re new to such levels of market volatility.
Managing the volatility that comes with such catalysts

If the Fed cuts interest rates, there could be a significant amount of volatility in the crypto market as prices whipsaw between highs and lows before settling down. As such, a highly leveraged trading portfolio could potentially run into margin call issues if left unattended. To prevent your holdings from getting forcefully liquidated, it can be a good idea to ensure there’s sufficient funding in your trading account or to make use of our take-profit and stop-loss orders.
Mitigating risk and hedging with crypto options

If you’re experienced with trading crypto options, you may want to consider hedging your overall holdings with crypto options. Given that the market is pricing in an upcoming rate cut, implied volatility (IV) will likely ramp up once FFR cuts are confirmed and the Fed officially announces its new interest rate decision. To take advantage of this, astute crypto option traders could consider a strangle options strategy given that crypto option premiums tend to spike in anticipation of such major policy events. Alternatively, crypto option traders may also consider defensive options like the covered call strategy to hedge and HODL at the same time.
Dollar cost averaging instead of going all-in

As Warren Buffett once said, time in the market is better than timing the market. If you’re intending to increase your exposure to the crypto market but are wary of the dump that could follow once interest rates are cut, you may be inclined to give dollar cost averaging a try. Since it effectively simplifies the trading process by removing the risk of emotions-based trading, DCAing could be an option to consider if you’re new to crypto trading.
Is it too late for rate cuts?

A hotly contested topic these days among traders hinges on whether the Fed comes too late with its FFR cuts. Some have posited in the past that the economy tends to break before the Fed reacts with interest rate cuts. In this view, the market endures a much deeper recession than would have been the case if the Fed had acted more proactively. This topic certainly deserves a deep dive given that US markets are potentially in a similar situation now.

This argument is based on the idea that the Federal Reserve often waits for economic indicators to deteriorate significantly before taking action to lower interest rates. By the time the Fed cuts rates, naysayers say, the economy may already be in a recession, making it more difficult to stimulate growth and prevent a deeper downturn.

There are counterarguments to this perspective, however. The Federal Reserve often relies on economic data that can be lagging, making it difficult to anticipate economic downturns in real-time along with how economic conditions can be unpredictable, and the Fed may be hesitant to act too aggressively for fear of overshooting its targets.

Ultimately, the question of whether the Fed is too late with its interest rate cuts is a complex one with no easy answer. While there are valid arguments on both sides, it’s clear that the timing of monetary policy decisions is both difficult and crucial for ensuring economic stability. With the lack of a perfect crystal ball, the Federal Reserve’s hesitation is understandable, since cutting interest rates prematurely can lead to inflation creeping back up while staying hawkish and keeping FFR high can lead to suppressed economic growth.
Final words and next steps
The Federal Reserve’s decision to lower the Federal Funds Rate in 2024 could have significant implications for the crypto market. While lower interest rates can stimulate economic growth and create a more favorable environment for cryptocurrencies, factors like market sentiment, regulatory changes, and technological advancements will also influence their impact. New crypto traders should be aware of the potential volatility, manage risks through hedging strategies, and stay informed about market developments to make the most informed trading decisions while navigating this dynamic landscape.

Wondering why some TradFi traders are rotating their funds into gold? Check out our in-depth comparison between gold and Bitcoin to learn more. Alternatively, if you’re keen to learn more about alternative assets, our crypto vs stocks guide will be right up your alley.

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Hamster Kombat warned CEOs (players) about the risks of cheating, with some players potentially receiving the “Cheating is Bad” badge.
Hamster Kombat, the popular play-to-earn Web3 game on The Open Network (TON), has announced a robust anti-cheating strategy to ensure fair play among its growing user base. In a statement shared on social media, the game’s team warned CEOs (players) about the risks of cheating, with some players potentially receiving the “Cheating is Bad” achievement—a clear indicator of unethical in-game behavior.

The introduction of this strategy comes ahead of the highly anticipated airdrop for $HMSTR, the game’s native token. By curbing cheating, Hamster Kombat aims to protect genuine players and ensure fair token distribution.

With the Airdrop being framed as just the beginning, Hamster Kombat is hinting at a series of major updates, including the release of Season 2. While details on these upcoming features remain limited, the announcement is creating buzz within the web3 gaming space, known for its decentralized and community-driven ecosystems.

“We want to protect the hard-working players and community members, giving them the opportunity to get a fair share of the airdrop,” the team emphasized in their message. The airdrop is set to be a significant milestone for the game, but the developers hinted that it’s only the beginning, teasing “major updates” and the launch of Season 2.

With over 300 million players globally, the team’s efforts to combat cheating underscore their commitment to building a thriving, fair, and transparent gaming community. Hamster Kombat’s vision is clear: they want to set the foundation for the largest Web3 gaming platform.

As the game prepares for its next phase, players are encouraged to play fair, with the developers reminding them that “cheating will get you nowhere.” The new measures reflect a growing focus on integrity within Web3 games, where community trust is critical for long-term success.

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As we approach the September 17-18 FOMC meeting, the economic community is buzzing with anticipation, largely centered around the Federal Reserve's decision on interest rates.
Here's a deeper dive into what we might expect:
- **Rate Cut Speculation**: The consensus leans towards a 25-basis point rate cut, which would adjust the fed funds rate from its current range of 5.25-5.50% down to 5.00-5.25%. Although some discussions point towards a 50 basis points cut, the prevalent view among Fed officials appears to favor a more cautious approach. This decision is influenced by several factors:
- **Eased Financial Conditions**: Recent market movements, particularly the decline in mortgage rates, suggest that financial conditions have already started to loosen. This might reduce the urgency for a more aggressive rate cut.
- **Persistent Inflation Concerns**: Despite some deflationary signals in overall monthly inflation, certain sectors like non-housing services and shelter costs continue to show upward price pressures. This indicates that the battle against inflation isn't yet won, advocating for measured monetary policy adjustments.
- **Labor Market Dynamics**: The labor market, while cooling, isn't seen as necessitating a drastic policy shift. With GDP growth forecasted above 2%, the FOMC might see a smaller rate cut as sufficient to support a soft economic landing.
- **Political Considerations**: Although the Fed aims to be apolitical, the timing of the meeting so close to the presidential election might influence the decision towards a more conservative cut to avoid perceptions of political bias.
- **Beyond the Rate Cut**: The FOMC meeting will also update the Summary of Economic Projections (SEP). Key points to watch include:
- **Interest Rate Forecasts**: Changes in the SEP could signal more rate cuts for 2024, potentially setting the stage for adjusting market expectations on future monetary policy.
- **Long-term Rate Projections**: If the longer-run fed funds rate forecast drops from the previous 2.8%, it would indicate a significant shift in long-term economic expectations.
- **Powell's Communication**: Chair Jerome Powell's press conference will be crucial. He'll navigate the delicate balance of reassuring markets about the commitment to controlling inflation while defending the Fed's independence amidst political scrutiny.
The FOMC's decisions and Powell's messaging will not only set the tone for immediate market reactions but will also influence economic strategies across sectors for the remainder of 2024 and beyond. This meeting could mark the beginning of a new phase in monetary policy, emphasizing a cautious return to growth while keeping inflation in check.

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The crypto world is full of airdrops promising high rewards, but it's crucial to evaluate their legitimacy before engaging. Recently, there's been buzz around the X Empire Airdrop. Let’s break it down with only verified information from trustworthy sources.
1. What Is X Empire?
X Empire claims to be a new project aiming to build a decentralized platform. They’ve promoted airdrops offering significant token rewards for early participants. However, details about the project, including its team, vision, and whitepaper, are scarce, raising concerns about its legitimacy.
Red Flags to Watch Out For
Lack of Transparency: Unlike reputable airdrops, X Empire provides very limited information about its team and development. Legitimate projects often have a clear and detailed roadmap, active community engagement, and transparent team information.
No Whitepaper: A solid crypto project typically releases a detailed whitepaper explaining its technology, goals, and tokenomics. X Empire has not yet published one, which is a major red flag.
Excessive Promises: Promising unusually high rewards is a classic trick used by fraudulent airdrops. Legitimate projects generally offer moderate incentives to build an organic community, not to lure participants with unrealistic rewards.
3. Feedback From Trusted Sources
No Major Exchange Listings: To date, X Empire has not been announced or listed on any well-known crypto exchanges like Binance, Coinbase, or Kraken. Most reputable airdrops get some level of coverage or validation from established platforms.
Social Media Analysis: Scanning their social media presence, X Empire's accounts lack engagement, with minimal interaction from established crypto figures or communities. Legitimate projects typically show a much higher level of active discourse.
4. What Are Reputable Sites Saying?
According to independent crypto watchdog platforms such as ScamAdviser and TokenSniffer, X Empire's site has low trust scores and several users have flagged it as potentially suspicious. Furthermore, there is no verifiable news coverage
Final Verdict: Exercise Caution
While X Empire hasn’t been explicitly called out as a scam, the lack of transparency, absence of a whitepaper, and unrealistic promises make it highly questionable. As always, it’s wise to proceed with caution, especially with new projects offering high rewards without solid backing.
Before participating in any airdrop, ensure you research thoroughly, verify the project's legitimacy, and never share personal keys or sensitive information. Trustworthy airdrops will have clear, transparent goals and trusted partners backing them.

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