[Coin Market Trends] Investment sentiment recovers with the Fed's rate cut outlook... Bitcoin touches 170 million won

The Federal Reserve's expectations of interest rate cuts have led to an upward trend in major digital assets, including Bitcoin. As positive sentiment spreads across risk assets and investor confidence recovers, Bitcoin touched the 170 million won level during trading.

As of 8:30 AM on the 27th, Bitcoin (BTC) was trading at 169.5 million won on a domestic digital asset exchange, up 1.91% from 9 AM the previous day. On a global exchange, it recorded $114,407, up 2.46%. At the same time, the CoinDesk20 index, which includes Bitcoin and 20 major altcoins, rose 2.06%. By coin, Ethereum (ETH) was up 5.24% at $4,164, and XRP was up 2.10% at $2.66.

According to data from a platform, about $168.74 million ( about 243 billion won ) worth of positions in Bitcoin were liquidated over the past 24 hours, with 93% being short positions. In the overall digital asset market, about $392.32 million ( about 565 billion won ) worth of liquidations occurred.

The market is leaning towards the expectation that the Fed will cut the benchmark interest rate by 0.25 percentage points to 4% on the 30th. According to the CME FedWatch, the market is also predicting a high possibility of an additional cut in December following this cut.

As economic forecasts and the dot plot will not be released at this meeting, market attention is focused on Fed Chairman Jerome Powell's press conference. Powell is expected to reiterate his message from September that downside risks to the job market have become greater than inflation concerns. If such statements continue, it could support the upward trend in risk assets overall by raising expectations for further monetary easing in the future.

Another market focus is the direction of the Fed's balance sheet operations. Powell recently hinted that the end of quantitative tightening (QT) is approaching. The Fed has been implementing QT since 2022, reducing its assets by selling treasury bonds to decrease market liquidity.

Recently, there have been signs of tightening market liquidity as bank system reserves have fallen below $3 trillion. This is interpreted as a signal that the Fed is gradually approaching its target of “sufficient liquidity level”.

Although the Fed stopping asset reduction does not immediately mean returning to a “quantitative easing (QE)” policy, the market expects concerns about liquidity shortages to ease. This has led to forecasts that investor sentiment towards risk assets, including digital assets, could further improve.

Amidst this optimistic atmosphere, earnings reports from major tech companies like Apple, Meta, Alphabet, and Microsoft are scheduled for this week. Investors are particularly focusing on whether AI-related investment spending will continue to expand.

Ulrich Urbahn, Head of Multi-Asset Strategy at Berenberg Bank, said, “Policy decisions from major central banks like the Fed, ECB, and BOJ will be announced in succession, while earnings from large tech companies like Apple and Microsoft will be released simultaneously. These factors could potentially lead to greater market volatility than usual.”

He added, “While continued monetary policy easing could strengthen investment sentiment towards risk assets like stocks and commodities, short-term adjustments may be inevitable if corporate earnings fall short of expectations or policy uncertainties increase.”

Meanwhile, the Fear & Greed Index from Alternative, which indicates investor sentiment in the digital asset market, slightly rose to 40 points (Fear) on this day, up from 37 points the previous day. Alternative's Fear & Greed Index indicates stronger selling sentiment as it approaches 0, and stronger buying tendency as it approaches 100.