Tokenized Winners and Losers On Fed's Rate Cut
Gold and Agriculture lead tokenized real-world asset markets as Fed cuts interest rates for the first time since 2020.
The Federal Reserve announced a 50 basis point interest rate cut at the FOMC meeting Wednesday, the first rate cut since 2020. Central bank chairman Jerome Powell also announced there will be four additional cuts coming in 2025 and two more cuts in 2026.
The Fed considered the following factors in making their decision:
Unemployment has risen to 4.4%, missing their previous forecast of 4.0%.
Inflation will hit 2.6% by the end of 2024 and 2.2% in 2025.
Economic growth is currently at 2% and predicted to remain so through 2026.
Powell did not use his press conference to declare victory over inflation since it has not reached the Fed’s goal of 2.0%. When pressed about whether the sizable rate cut signaled a risk of a recession, Powell stated, "I don't see anything in the economy right now that suggests that the likelihood of a downturn is elevated."
Tokenized RWA Market Reaction
Out of the gate physical gold reached a year-to-date high of $2,600 per ounce which lifted tokenized gold. DGX, PAXG, and XAUT were the clear winners post-FOMC. Energy and Real Estate were down while Agriculture gained a modest 1.7% average.
Looking at the average gains and losses of the top RWA tokens by sector:
Gold: +4.4% (DGX, PAXG, XAUT)
Energy: –5.4% (EWT, GHST, REG,MPL, POWR)
Agriculture: +1.7% (AGRF, AGT)
Real Estate: –3.3% (POLY, PRO)
Food: –1.0% (FOOD, TE-FOOD)
Bitcoin Drops As Bearish Bets Pays Off
According to CMEFedWatch, 63% of investors had predicted a 50 basis point rate cut. Despite Powell’s assurances that the Fed is not concerned about a recession, it appears the market may think differently as risk assets ,such as bitcoin, are selling off.
Bitcoin dropped below $60,000 during the press conference with a valuation of $59,854 at press time. Despite a 5% rally yesterday, bears priced in a $60,000 to $62,500 sell-off in according to order books from Binance as the BTC-USDT trading pair the most liquid.
The Road Ahead
Investors in tokenized RWA can expect a neutral-to-negative mood in the market with bears having the upper hand through December. With the economy growing at a slower than expected rate and unemployment rising above the Fed’s forecast, it’s safe to say that investors are nonplussed about the economy for the remainder of 2024.
Despite today’s large rate cut, there is no sign of widespread recession panic. The leading tokenized commodities are still dominant, even with losses, showing that even tokenized RWAs are no less volatile to market factors than their physical counterparts.