Fed Easing Bets Lift Gold to Record Highs, Bitcoin Stalls Without US Reserve Bid
Digital Asset Market: Bitcoin hovered around 115,000 dollars at the Wall Street open, with traders watching for possible long liquidations, especially for the levered positions that are more vulnerable. Analysts noted significant volatility and liquidity clusters on both sides of the market, with some suggesting manipulative price behavior. At the same time, gold surged to a record high above $3,700 before pulling back, while markets turned cautious ahead of Wednesday’s Federal Reserve meeting.
Macro Economics: China has announced new measures to boost consumption in the services sector and stimulate economic growth amid signs of a slowdown, as joint efforts by multiple government agencies pledge to further open industries such as internet, culture, telecommunications, and medical care to both foreign and private capital. The government will ease market access in high-end medical care, expand visa-free entry for overseas visitors, and support international sports events to attract more tourism. Additional funding from central and local sources will be used to develop cultural, tourism, elderly care, childcare, and sports infrastructure. At the same time, financial institutions are being encouraged to increase lending to service businesses. China has also allocated 231 billion yuan for a consumer goods trade-in program and recently introduced interest subsidies for services such as catering and tourism, as policymakers prioritize supporting the services sector to help drive economic recovery.
Whereas, US consumers are experiencing increasing financial stress as inflation and higher interest rates make affordability more difficult. The national average FICO score has dropped by about two points. Gen Z adults have faced the largest score decreases, mainly due to rising student loan delinquencies, which have reached record highs this year. Over 10% of those with student loans are falling behind on repayments. This situation contrasts with assurances from major banks that consumers are largely maintaining financial health, even as data points to a cooling job market.
Equities: US stocks slightly retreated from record highs as the S&P 500 and Nasdaq each slipped about 0.1 percent and the Dow fell more than 0.3 percent, even as retail sales data for August showed robust consumer spending amid ongoing inflation and labor market concerns. Oracle shares jumped as much as 5 percent after reports that the US and China have agreed to a preliminary deal on TikTok, with Oracle positioned as a key contender to acquire or partner with the social media platform. The agreement, reportedly discussed during trade talks in Madrid, would allow Oracle to continue hosting TikTok’s US user data, as TikTok faces a deadline to divest its ownership by September 17. Oracle’s strong performance also comes after news of ambitious cloud revenue projections and partnerships in AI, contributing to its stock soaring 81 percent this year.
The Fed and US Treasury: Heightened tensions mark the Federal Reserve's September 17th meeting on interest rate policy, as it includes Stephen Miran, a newly appointed Trump loyalist, and Lisa Cook, whom the Trump administration has unsuccessfully tried to remove in a move seen as threatening the Fed's independence. Miran, who was quickly confirmed by the Senate, may push for a larger rate cut than the expected quarter point, which could make this meeting unusually contentious and lead to an uncommon number of dissents. Meanwhile, most economists surveyed believe Trump's actions are intended to limit or eliminate the Fed's independence, potentially resulting in higher inflation, unemployment, and a weaker dollar. While the Fed is expected to cut rates by a quarter point, opinion is split on whether this is the right move, and recession concerns are rising, with forecasts showing greater unemployment and inflation risk but little change in projected economic growth for the next two years. The White House is appealing the court ruling allowing Cook to remain, keeping the battle over the Fed’s independence in the spotlight.
Geopolitical: Israel has launched a major ground invasion of Gaza City nearly two years into its military campaign in the enclave, escalating an offensive that has drawn mounting international backlash over civilian deaths and destruction. The assault has led to growing accusations of disproportionality, including a recent UN Commission of Inquiry finding of genocide. While Israel claims it is targeting Hamas and seeking hostage releases, countries such as Norway, Spain, and Ireland have recognized Palestinian statehood, and the International Criminal Court has issued arrest warrants for Israeli and Hamas leaders. Strained relations with Arab nations have worsened after an Israeli strike on Doha, with Gulf states warning ties could suffer as ongoing civilian casualties and possible West Bank annexation threaten U.S. efforts to broaden Arab-Israeli normalization under the Abraham Accords. Markets have so far remained mostly unaffected, though experts doubt Israel’s push will eliminate Hamas as an ideology.
View from our desk
Bitcoin: strategic reserve is the swing factor
Bitcoin’s next meaningful move depends on whether the US Strategic Bitcoin Reserve materializes this year. An executive order in March established the concept of a Strategic Bitcoin Reserve and a US Digital Asset Stockpile, and follow-up work, including a Treasury-directed feasibility study and public remarks from the administration’s crypto liaison, indicates the idea remains active. A finalized accumulation strategy has not been released, and most market observers now view a public program as unlikely before 2026. In practice, that means the market may be left to price around private accumulation and sporadic corporate buying rather than a sustained government bid, and absent visible, persistent demand, investor fatigue could increase and leave Bitcoin exposed to downside when leverage unwinds. Without clear, large-scale accumulation from official or clearly identified private buyers, we expect Bitcoin to trade range-bound with elevated tail risk over the next six to twelve months; a clear signal of government accumulation would likely trigger a sharp re-rating higher, while prolonged silence raises the odds of a corrective pullback.
Gold: record highs on easing expectations
Gold is trading at fresh highs as markets increasingly price a near-term easing path from the Federal Reserve. Expectations of an initial quarter-point cut and the prospect of additional 25 basis-point moves have pushed real yields lower and strengthened demand for bullion as a hedge against looser policy and political uncertainty. Portfolio flows into gold ETFs, along with repositioning by fixed-income managers reducing duration sensitivity, have reinforced the rally. At the same time, gold’s upside is sensitive to inflation surprises and shifts in real rates, so rapid swings in data or hawkish central bank language could quickly reverse some gains. We see gold remaining well supported in the near term and likely testing higher levels if the Fed signals a sustained easing cycle, but a surprise rebound in real rates or materially stronger inflation prints would probably trigger near-term profit taking.
Fed and rates: measured easing priced in
Markets are pricing a path of roughly three 25 basis-point cuts across upcoming FOMC meetings, beginning with the widely expected quarter-point cut at the conclusion of the current meeting. Policymakers appear to favor a gradual, data-dependent approach: labor demand is softening while recession risk remains contained, which makes measured easing more likely than aggressive moves. Election-year dynamics and political scrutiny add another layer of caution to Fed communication, so statements from Chair Powell and other officials will be the primary market-moving events as investors try to infer the sequence and timing of cuts. We expect the Fed to proceed cautiously and deliver about 75 basis points of easing through the next few meetings if data continue to soften, with volatility concentrated around key data releases and Fed commentary; risk assets should feel relief when cuts are confirmed, but the durability of any rally will depend on whether growth indicators stabilize.
Happy Trading!
The 1Konto Team
About 1Konto
1Konto powers institutional finance with a unified platform for trading, settlement, and credit across stablecoins, fiat, and digital assets. Through 1KPrime, clients gain access to deep liquidity, real-time cross-border settlement, and integrated Bitcoin-backed credit facilities, all supported by trusted custody infrastructure. From treasury management to automated capital deployment, 1Konto enables the next generation of global financial operations with the security, efficiency, and transparency institutions require.
Contact us today to learn how we can support your trading, settlement, and capital needs.
Not Financial Advice Disclaimer