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Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news’ editorial. The Federal Reserve has a tall order: protecting the US dollar, which is quickly losing its value as BRICS nations explore a post-dollar world. From the Federal Reserve’s perspective, the outlook is unclear because Trump’s policy plans remain unclear. As far as anyone knows, a severe market crash à la 2008 could be on the horizon. The business cycle theory suggests these crashes are a natural part of economic activity.  A crash is seemingly always lurking beneath the surface. In December 2024, the Dow posted its first ten-day losing streak since 1974, partly due to a lackluster rate outlook at the Federal Reserve, which said it would cut rates only two times in 2025. Despite the losing streak, the stock market remains in the midst of the largest bull market in history.  The stock market posted all-time highs 57 times so far in 2024. It hasn’t had a deep, prolonged correction since the 2008 global financial crisis. Markets turned around rather quickly during the March 2020 COVID-19 crash. The mother of all bubbles With so much long-term euphoria in the air, now would be an apropos moment for the “mother of all bubbles” to pop. There is a general feeling that stocks will continue to perform well, but general feelings are often wrong. The big pop could again be averted if the Fed continues to inject liquidity into markets and slash interest rates, meaning more money destined for the stock market. Bitcoin (BTC) has notably never existed in an environment without quantitative easing. How it might behave remains to be seen, theoretically. But, until then, due to inflation and damaging interest rate policies, even Main Street investors…

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Filed under: News - @ February 4, 2025 12:25 pm