Global markets ride the Fed wave, but can the rally last?

Global markets ride the Fed wave, but can the rally last?

Global markets showed a resilient spirit as investors largely brushed aside brewing political storms in key regions like Japan, France, and parts of the emerging world. Traders focused instead on the promise of easier monetary policy from the Federal Reserve, which propelled US stocks toward fresh peaks.

The S&P 500 gained 0.21 per cent, the Nasdaq Composite climbed 0.45 per cent to a record close of 21,798.70, and the Dow Jones Industrial Average rose 0.25 per cent. This upbeat mood reflected growing bets on a rate cut at the Fed’s September 17 meeting, with markets now pricing in a strong chance of a 50 basis point reduction following recent weak jobs data.

Economists at Standard Chartered and Bank of America adjusted their forecasts accordingly, pointing to cooling labour market signals as the trigger for bolder action from policymakers.

In my view, this optimism makes sense because the US economy still hums along with solid consumer spending and corporate earnings, but the Fed needs to act decisively to prevent any slowdown from gaining traction. A half-point cut could juice risk assets further without igniting inflation fears, especially with core PCE readings holding steady around 2.6 per cent.

Bonds, dollar, and gold respond

Bond markets echoed this sentiment as yields dipped across the curve. The two-year Treasury yield dropped 2.3 basis points to 3.486 per cent, while the ten-year yield fell 3.4 basis points to 4.040 per cent. Investors piled into Treasuries as a safe haven amid the political noise overseas, but the real driver came from expectations of lower short-term rates. The US Dollar Index weakened 0.3 per cent, easing pressure on exporters and giving multinational companies a breather on their overseas profits.

Gold, meanwhile, advanced 0.7 per cent to close at US$3,636 per ounce, benefiting from the dollar’s slide and persistent safe-haven demand tied to geopolitical flare-ups in the Middle East and Europe. I see gold’s rally as a classic hedge play, but its lofty levels also hint at broader concerns about fiscal sustainability in the US, where deficits continue to balloon past US$2 trillion annually. If the Fed cuts rates too aggressively, it could fuel even more gold buying from central banks in Asia and the Middle East.

Oil steadies on OPEC+ restraint

Over in commodities, Brent crude oil settled 0.8 per cent higher at US$66 per barrel after OPEC+ surprised markets with a smaller-than-expected supply hike. The group, comprising eight key members, agreed to boost output by just 137,000 barrels per day starting in October, a fraction of the 555,000 barrels per day increases seen in prior months. This cautious approach stems from sticky demand worries amid slowing global growth and ample non-OPEC supply from the US shale patch.

Geopolitical tensions, including Houthi attacks in the Red Sea and sanctions on Russian exports, kept a floor under prices, preventing a deeper slide. OPEC+’s restraint buys time for oil producers to navigate the energy transition, but it also underscores the cartel’s waning influence as electric vehicles proliferate and renewable investments surge. If China’s economy rebounds more forcefully than expected, we could see Brent push toward US$70 by year-end, but recession risks in Europe temper that upside.

Asia reacts to US momentum

Asian stock indexes mostly climbed on Monday, buoyed by the US rally and hopes for synchronised global easing. Japan’s Nikkei 225 surged to a milestone 44,000 for the first time, fuelled by optimism around trade deals and consumer spending data that beat forecasts. The index pulled back slightly in early Tuesday trading as Prime Minister Shigeru Ishiba’s potential departure added to policy uncertainty, with the yen weakening further against the dollar.

Political turbulence in Europe and emerging markets

In France, the government’s collapse under Prime Minister François Bayrou marked yet another chapter in political instability, raising fears of snap elections and fiscal gridlock that could drag on the eurozone’s recovery. Emerging markets faced their own headwinds, but the standout story came from Indonesia, where the Jakarta Composite plunged 1.28 per cent ahead of President Prabowo Subianto’s announcement replacing Finance Minister Sri Mulyani Indrawati with economist Purbaya Yudhi Sadewa.

Mulyani, a globally respected figure who steered the economy through the pandemic, leaves a void that could spark market jitters, especially with Indonesia’s rupiah already under pressure from capital outflows. Early Tuesday sessions saw most Asian bourses edge higher, with Hong Kong’s Hang Seng up 0.5 per cent on tech gains and South Korea’s Kospi adding 0.3 per cent.

These political shifts, while disruptive, are priced mainly in the months following, and markets will pivot back to fundamentals, such as earnings growth. That said, Indonesia’s move feels riskier; losing Mulyani at a time of high public debt could invite rating agency scrutiny and higher borrowing costs for Southeast Asia’s largest economy.

Crypto consolidates amid uncertainty

Turning to cryptocurrencies, Bitcoin grappled with resistance around US$112,500, consolidating after a recovery from the US$110,000 support zone. The flagship coin traded above US$111,000 and its 100-hour simple moving average, with a bullish trend line holding at US$110,800 on the hourly chart sourced from Kraken data. Bulls pushed past the 50 per cent Fibonacci retracement of the recent swing from US$113,372 to US$110,039, but bears dug in near US$112,600, capping upside.

A break below US$110,800 could trigger a sharper pullback, while staying under US$113,000 might signal more downside. Recent whale activity added pressure, with large holders offloading 112,000 BTC over the past month, hinting at September’s historical weakness for the asset.

On X, analysts noted Bitcoin boxing between US$112,000 and US$114,000 ahead of key CPI data, urging caution in a video breakdown that highlighted macro tailwinds from Fed cuts. Another post from Swiss Whale Intelligence flagged massive sales of over 5,000 BTC each, underscoring exchange inflows that could weigh on sentiment.

In my opinion, Bitcoin’s current stall reflects a broader crypto market awaiting clarity on US policy, but the setup favours bulls if rate cuts materialise. With mining difficulty hitting all-time highs, network security remains robust, and institutional inflows via ETFs could propel BTC toward US$116,000 if it clears US$113,000 resistance. September often proves choppy for Bitcoin, but this cycle’s momentum from halvings and adoption suggests any dip below US$110,000 offers a buying opportunity rather than a bear trap.

Dogecoin’s speculative swings

Dogecoin, the perennial meme coin darling, sparked endless debates on its trajectory, blending community fervour with technical scrutiny. After a strong first-quarter rebound above US$0.40, DOGE retreated to around US$0.22, testing support amid waning hype. Recent charts from CryptoELITES on X show resistance at US$0.27 and US$0.31, with a breakout requiring fresh institutional spark or viral momentum.

The REX-Osprey ETF filing emerged as a potential catalyst, promising easier access for big players and clearer regulations that could mirror Bitcoin’s ETF boost. Changelly’s forecasts paint a measured path: US$0.21 to US$0.24 in 2025, dipping to US$0.14 to US$0.19 in 2026 before rebounding to US$0.36 in 2027 and US$0.45 to US$0.53 in 2028.

By 2030, they eye highs near US$1.13, driven by broader crypto adoption and Dogecoin’s utility in payments via integrations like Twitter’s tipping features. Other analysts diverge; Wallet Investor sees an average US$0.279 by the end of 2025, while CoinCodex predicts a 16 per cent rise to US$0.276 by October, contingent on the altcoin season kicking in as Bitcoin dominance fades.

I lean toward the conservative side here; Dogecoin thrives on Elon Musk’s tweets and meme culture, but sustained growth requires real-world use cases, such as microtransactions or DeFi integrations. At current levels, it carves a potential bottom, and a push to US$0.54 on ETF approvals feels plausible, but US$5 remains a stretch without massive hype cycles. Speculators aiming for US$1 by 2030 should watch for volume spikes and correlation with Bitcoin’s movements, as DOGE often amplifies broader crypto trends.

Final thoughts: Risk appetite intact

Looking across these developments, global risk appetite holds firm despite the political crosswinds, and I expect that trend to persist into the week’s CPI release and Fed meeting. US equities near records underscore the strength of tech and consumer sectors, but watch for overvaluation in megacaps like Nvidia and Apple, where earnings multiples exceed 30 times forward profits.

Political risks in Japan and France could spill over if they delay reforms, hurting export-dependent economies, while Indonesia’s finance minister swaps tests emerging market resilience. In commodities, oil’s modest uptick buys time for OPEC+, but non-OPEC supply growth caps gains. Crypto, with Bitcoin’s consolidation and Dogecoin’s speculative allure, mirrors the macro divide between steady growth and high-volatility bets.

Overall, I view this as a constructive setup for risk assets, provided the Fed delivers on cuts without signalling distress. Investors should trim exposures in volatile pockets like emerging equities and meme coins, while adding to quality US names and gold as hedges. The next few days will clarify if this shrug-off of uncertainties proves prescient or premature, but the data points to a continued upward grind amid easing cycles worldwide.

 

Source: https://e27.co/global-markets-ride-the-fed-wave-but-can-the-rally-last-20250909/

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Is September a Critical Risk Threshold for Bitcoin?

Is September a Critical Risk Threshold for Bitcoin?

Bitcoin’s September performance has long been a focal point for investors, oscillating between historical bearishness and recent bullish surges. This month, often dubbed a “critical risk threshold,” now faces a confluence of macroeconomic pressures, leveraged market dynamics, and diverging investor sentiment. As the U.S. tariff war escalates and derivatives markets grow increasingly overheated, the question of whether September 2025 will mark a turning point—or a tipping point—demands closer scrutiny.

Ask Aime: Will Bitcoin’s September performance be defined by historical bearishness or recent bullish trends?

Seasonal Trends: From Bearish Legacy to Bullish Anomaly

Historically, September has been a weak period for Bitcoin. In 2024, the cryptocurrency fell below $55,000 during the month, reflecting a pattern of profit-taking and macroeconomic uncertainty [1]. However, 2025 shattered this narrative. By August 27, 2025, Bitcoin had surged to an all-time high of $111,842.71, driven by the approval of U.S. Bitcoin ETFs and a weakening U.S. dollar [2]. This 11% September rally—the best in a decade—defied historical trends, signaling a shift in market sentiment from risk-off to risk-on [3].

The divergence underscores Bitcoin’s evolving role. While traditional safe-haven assets like gold have delivered a mere 6% compound annual growth rate (CAGR) from 2015 to 2025, Bitcoin’s CAGR of ~115% has repositioned it as a growth asset rather than a hedge [4]. Yet, this transformation does not negate September’s inherent volatility. The month remains a battleground for macroeconomic forces, where institutional flows and geopolitical shocks can amplify price swings.

Macroeconomic Triggers: Tariffs, Dollar Weakness, and Diverging Flows

The unresolved U.S. tariff policies under President Donald Trump have injected unprecedented uncertainty into global markets. By 2025, tariffs had pushed the average U.S. tariff rate from 2.5% in 2024 to 16.5%, disrupting supply chains and triggering retaliatory measures from trade partners [5]. While Bitcoin initially dipped amid tariff-driven economic anxiety, its inverse correlation with the U.S. dollar has since become a tailwind. The Dollar Index (DXY) hit a multi-year low in late 2024, bolstering Bitcoin’s appeal as a hedge against fiat devaluation [3].

Meanwhile, investor flows between Bitcoin and gold have diverged sharply. Gold, traditionally a store of value, has struggled to compete with Bitcoin’s speculative allure. Data from 2015 to 2025 shows Bitcoin’s market cap expanding from ~$1 billion to over $1 trillion, while gold’s growth has remained stagnant [6]. This shift reflects a broader reallocation of capital toward assets perceived to outperform in inflationary environments, even as leveraged derivatives markets amplify systemic risks.

Leveraged Market Fragility: Derivatives and the Amplification of Volatility

The Bitcoin derivatives market has reached unprecedented levels of activity. By Q3 2025, open interest (OI) in BTC derivatives exceeded $73.59 billion, with institutional participation driving concentrated positions on exchanges like CME and Binance [7]. While leverage ratios have not shown sustained spikes, the sheer volume of speculative bets creates fragility. A single macroeconomic shock—such as a tariff-related market selloff—could trigger cascading liquidations, exacerbating price swings.

This fragility is compounded by the lack of regulatory clarity. Unlike traditional markets, crypto derivatives operate in a gray zone, where leverage limits and margin requirements vary widely across platforms. As of June 2025, leveraged longs accounted for 60% of total OI, with short positions struggling to gain traction amid bullish sentiment [8]. Such imbalances heighten the risk of a “gamma squeeze” if prices move sharply against leveraged positions.

Strategic Implications: Cautious Positioning in a High-Stakes Environment

For investors, the convergence of these factors suggests a need for cautious positioning. While Bitcoin’s September 2025 rally hints at strong institutional confidence, the interplay of tariffs, dollar weakness, and leveraged markets creates a volatile cocktail. Key considerations include:
1. Hedging Against Derivatives Risk: Diversifying exposure across spot and derivatives markets to mitigate liquidation risks.
2. Monitoring Macro Triggers: Closely tracking U.S. tariff announcements and Federal Reserve policy shifts, which could disrupt both Bitcoin and gold.
3. Leveraging Divergent Flows: Allocating capital to Bitcoin for growth while maintaining a smaller gold position to hedge against systemic shocks.

Conclusion

September 2025 has emerged as a critical juncture for Bitcoin, where historical volatility collides with macroeconomic tailwinds and leveraged fragility. While the cryptocurrency’s surge defies traditional seasonal patterns, the unresolved U.S. tariff war and derivatives-driven speculation create a high-risk environment. Investors must balance optimism with prudence, recognizing that Bitcoin’s role as a macro hedge—and its susceptibility to systemic shocks—is far from settled.

Source:
[1] Bitcoin surges 11% in best September in a decade [https://www.etoro.com/news-and-analysis/crypto/bitcoin-surges-11-in-best-september-in-a-decade-is-85k-next/] [2] Bitcoin price history Aug 27, 2025 [https://www.statista.com/statistics/326707/bitcoin-price-index/] [3] Bitcoin’s price history: From its 2009 launch to its 2025 [https://www.aol.com/finance/bitcoin-price-history-2009-2024-191156264.html] [4] XAUUSD vs. Bitcoin – A Decade of Data (2015-2025) [https://www.tradingcup.com/learn/xauusd-vs-bitcoin-decade-of-data-should-you-copy-trade] [5] The Trade Deficit Delusion: Why Tariffs Will Not Make … [https://www.intereconomics.eu/contents/year/2025/number/4/article/the-trade-deficit-delusion-why-tariffs-will-not-make-america-great-again.html] [6] Bitcoin Value Graph 2015-2024 [https://www.statmuse.com/money/ask?q=bitcoin+value+graph+2015-2024] [7] The New Gold standard? Bitcoin’s macro hedge role amid… [https://www.linkedin.com/pulse/new-gold-standard-bitcoins-macro-hedge-role-amid-us-debt-anndy-lian-uv9cc] [8] CoinGlass Crypto Derivatives Outlook-2025 Semi annual [https://www.coinglass.com/learn/semi-annual-outlook-en]

 

Source: https://www.ainvest.com/news/september-critical-risk-threshold-bitcoin-2509/

 

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The market just hit a nerve: Is this the start of a 7 per cent crash?

The market just hit a nerve: Is this the start of a 7 per cent crash?

The narrative of a year-end rally persists but faces headwinds from softening labour data and geopolitical shifts. In my view, this moment represents a healthy pause in an otherwise robust bull market that began surging after the dramatic events of April 2025. That month marked what President Trump dubbed Liberation Day on April 2, when he unveiled sweeping tariffs across nearly all sectors of the US economy.

The announcement sparked immediate panic and a sharp sell-off, but markets quickly rebounded as companies announced massive onshore investments to sidestep the trade barriers. This rally propelled the S&P 500 and Nasdaq to impressive heights over the summer. Still, now signs of fatigue emerge in both the US and China, the two economic powerhouses driving global growth.

Market exhaustion and sector pressures

The United States stock market showed clear exhaustion last Friday, with major indices closing lower amid broader concerns about the pace of economic expansion. The S&P 500 declined by 0.32 per cent, the Nasdaq Composite edged down 0.03 per cent, and the Dow Jones Industrial Average fell 0.48 per cent. Energy and financial sectors led the downturn, as traders reacted to softer-than-expected labour figures and anticipation of Federal Reserve actions.

Nvidia, the bellwether of the technology sector, dipped below its 50-day moving average for the first time in weeks, trading around US$172 per share, while the average hovered at US$172.32 per share. This technical breach signals potential volatility in tech-heavy indices, where Nvidia’s performance often sets the tone.

The AI hype meets reality

Investors poured billions into artificial intelligence plays earlier this year, fuelled by the post-Liberation Day optimism, but now they demand tangible results rather than vague promises. Companies must demonstrate how AI translates into revenue and efficiency gains, or risk sharp corrections.

Salesforce exemplified this shift last week when its shares faced pressure amid fierce competition in the AI arena. The company rolled out new AI products under its Agentforce platform, aiming to empower small and medium-sized businesses with autonomous agents for tasks like customer service and data analysis.

However, rivals like Microsoft and Google intensified their offerings, with integrations that challenge Salesforce’s dominance in customer relationship management. Salesforce executives highlighted predictions that AI agents will transform industries by 2025, enabling smaller firms to compete with giants through more intelligent automation. Yet, market reaction turned skeptical as earnings reports revealed slower adoption rates than anticipated.

In my opinion, Salesforce remains well-positioned for the long term because its ecosystem seamlessly integrates AI across sales, marketing, and service tools. However, short-term hurdles from competition could cap the upside until proof of widespread deployment materialises. This evolving AI theme underscores a broader market maturation, where hype gives way to fundamentals.

Currency markets and the dollar debate

On the currency front, bets against the US dollar appear overly aggressive at this juncture. The Dollar Index closed 0.6 per cent lower last Friday at around 97.93, reflecting heightened expectations for Federal Reserve rate cuts. A steadier US economy, combined with persistent inflation above the Fed’s target, suggests fewer cuts than the market currently prices in, anticipating about five 25-basis-point reductions through September 2026.

The August non-farm payrolls report added fuel to this fire, showing only 22,000 jobs added, far below the forecasted 75,000, while June figures were revised to an outright loss. Unemployment climbed to 4.3 per cent, the highest in nearly four years, prompting traders to bake in a 25 basis point cut for the September 17 meeting and even 12 per cent odds of a 50 basis point move.

Yet, I believe the dollar’s downside remains limited. President Trump’s administration has secured over US$5 trillion in new onshore investments from companies and countries alike, including a US$1 trillion commitment from Japan and US$600 billion from Saudi Arabia over the next four years.

These inflows, aimed at bolstering domestic manufacturing amid the trade war, will sustain demand for the greenback. If the Dollar Index surges past 100, it could pressure US equities, particularly megacap stocks like those in the Magnificent Seven, which derive significant revenue from overseas operations.

Seasonal corrections and buying opportunities

A pullback of five to seven per cent in the S&P 500 seems likely, and perhaps steeper for the Nasdaq given its outsized gains since the Liberation Day rebound. The index wiped out all 2025 losses by mid-May, climbing from April lows around 6,000 to current levels near 6,450. No major negative catalysts loom on the horizon, such as earnings disappointments or policy shocks, so any correction should prove shallow and short-lived.

Strong buy orders cluster at key support levels, like the 200-day moving average for the S&P around 6,200, which could absorb selling pressure and preserve constructive sentiment heading into the traditional post-September rally. Historically, markets often experience the “September blues” but rebound strongly into year-end, especially when central banks ease their policy. With the Fed poised for cuts and global liquidity ample, I see this dip as a buying opportunity for long-term investors focused on AI and infrastructure themes.

Global macro landscape

Turning to the macro landscape, global risk appetite found some relief after US indices trimmed losses from recent peaks. Traders parsed the soft labor data, which highlighted a cooling job market without tipping into recession territory. The Bureau of Labor Statistics reported that average hourly earnings rose 0.3 per cent to US$36.53, indicating that wage pressures persist and could keep inflation sticky.

US Treasuries extended their rally, with the two-year yield dropping 7.9 basis points to 3.51 per cent and the ten-year yield falling 8.7 basis points to 4.07 per cent. This flight to safety reflects bets on aggressive Fed easing, but longer-term yields remain elevated due to fiscal expansion under the current administration. Gold prices climbed 1.2 per cent to hold above US$3,500 per ounce, reaching US$3,590 on Monday as a hedge against uncertainty.

Brent crude oil retreated 2.2 per cent toward US$65 per barrel, with OPEC+ signalling plans to increase production amid ample supply and softening demand forecasts. S&P Global analysts predict dated Brent could slide to US$55 by year-end, pressured by trade tensions and slower global growth.

Asia’s market resilience

Asian equity markets opened stronger on Monday, buoyed by political developments in Japan. The Nikkei 225 advanced 1.62 per cent to 43,714, leading gains after Prime Minister Shigeru Ishiba announced his resignation over the weekend. Ishiba stepped down following his Liberal Democratic Party’s historic election losses in July, which eroded his support and raised questions about fiscal policy continuity.

The yen weakened against the dollar on fears that political instability would delay Bank of Japan rate hikes, trading near 150 yen per chat. South Korea’s Kospi rose 0.24 per cent to 3,212, while Australia’s ASX 200 dipped 0.45 per cent.

Investors now await China’s August trade data, released later today, to assess the trade war’s toll. Exports grew at the slowest pace in six months, missing forecasts as shipments to the US declined sharply despite a brief truce in tariffs. Imports fell even more, signaling weak domestic demand. The US imposed tariffs up to 145 per cent on Chinese goods this year, escalating the conflict and prompting Beijing to retaliate with measures on American agriculture and tech.

In my assessment, China’s economy faces headwinds from this standoff, but stimulus measures, such as fee cuts in its US$4.9 trillion mutual fund industry, could provide a buffer. Overall, Asian markets demonstrate resilience, with tech and value stocks trading below their estimated worth, offering attractive entry points.

Crypto markets: Signs of recovery

The cryptocurrency market mirrored broader risk assets, with Bitcoin staging a modest recovery after three weeks of declines from its all-time high of US$124,474. The leading digital asset steadied at around US$110,900 on Monday, up nearly three per cent for the week. Technical indicators support further upside if momentum builds. The Relative Strength Index on the daily chart rose to 46, indicating a shift toward the neutral 50 level as bearish pressure subsides.

The Moving Average Convergence Divergence flashed a bullish crossover on Saturday, signalling improving sentiment and potential buy opportunities. Should Bitcoin push past its daily resistance at US$116,000, it could extend the rally toward US$120,000, driven by institutional inflows and halving cycle dynamics. However, a breakdown below US$105,573 in support might trigger a deeper correction toward US$100,000, especially if equity markets wobble.

Ethereum, meanwhile, consolidated between US$4,232 and US$4,488 for nine straight days, trading around US$4,300 after bouncing from the lower boundary. The RSI hovered near 50, reflecting trader indecision. A close above US$4,488 could propel Ethereum toward its record high of US$4,956, bolstered by network upgrades and ETF approvals.

Conversely, a drop below US$4,232 risks testing the 50-day exponential moving average at US$4,077. In the crypto realm, I remain bullish on both assets as adoption accelerates, but volatility tied to macro events like Fed decisions warrants caution. Bitcoin’s role as digital gold strengthens amid dollar strength debates, while Ethereum’s utility in decentralised finance positions it for outsized gains if AI integrations proliferate.

Closing thoughts: A balanced outlook

In reflecting on this market snapshot, I advocate a balanced yet optimistic stance. The post-Liberation Day rally transformed the economic landscape, channeling trillions into US onshore projects that promise job creation and supply chain resilience. Sure, trade wars with China inflict pain, curbing export growth and inflating costs, but they also spur innovation and domestic investment.

The weak jobs report underscores the need for Fed easing, which should lubricate markets without igniting inflation spirals. Political turbulence in Japan adds uncertainty, but history shows such transitions often lead to pro-growth policies.

For investors, focus on quality names in AI, renewables, and infrastructure to navigate the pullback. A five to seven per cent dip offers a chance to accumulate, as year-end tailwinds from holiday spending and tax strategies loom large.

Crypto enthusiasts should view Bitcoin’s technical rebound as a sign of resilience, while Ethereum’s consolidation suggests a breakout if global liquidity flows in. Overall, markets are taking a breather now, but the underlying momentum remains upward. Prudent positioning today sets the stage for substantial rewards by 2026.

 

Source: https://e27.co/the-market-just-hit-a-nerve-is-this-the-start-of-a-7-per-cent-crash-20250908/

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