Global markets are awaiting the decision of the Federal Reserve to cut interest rates this week, a move expected to have broad implications on stocks, cryptocurrencies, and economic growth.
In an interview with CNBC, Tom Lee, co-founder of Fundstrat, stated that the sectors benefiting from the potential decision vary, but the most notable is the Nasdaq 100 index, which leads the rise of AI stocks. He added that this explains the strength of trading in the "MAG 7" related to the giant technology companies.
Lee noted that there are historical patterns supporting his view, explaining that he relies on the experiences of September 1998 and September 2024, when the Federal Reserve had stopped moving for a long time and then decided to cut rates in September, which gave the markets a strong boost.
He also emphasized that cryptocurrencies are in the second position in terms of benefiting, especially Bitcoin and Ethereum, supported by the easing of monetary policies around the world alongside their strong seasonality. He said, "I believe Bitcoin and Ethereum could achieve tremendous progress in the next three months."
Lee added that sectors sensitive to interest rates, such as small businesses and financial institutions, may also see a recovery, but in his view, the Nasdaq 100 and cryptocurrencies remain the "most notable trades."
Nevertheless, the Federal Reserve is adopting a cautious approach, while President Donald Trump continues to pressure for a larger cut in rates, believing that the housing sector needs swift support. Trump affirmed in a post on "Truth Social" that any delay could harm the U.S. economy.
The Fed is expected to announce on Wednesday its first interest rate cut in 2025, based on weak labor market data despite strong GDP growth. Economic reports indicate that this will be the third time since 1996 that rate cuts coincide with the S&P 500 index reaching record levels, which has historically been associated with strong market gains.
As for cryptocurrencies, led by Bitcoin, they are preparing for a wave of sharp volatility. Analysts believe that the currency may first fall to the level of $104,000 or even $92,000 before beginning a new upward wave that could push it to unprecedented historical levels.
Investment experts confirm that the combination of interest rate cuts, strong economic growth, and the ongoing AI revolution could bolster long-term gains in stocks, gold, and Bitcoin, despite the chances of short-term volatility.
