Fed Rate Cut Won't Prevent US Recession, Nvidia Subpoena Could Be the Catalyst for the Market Crash

The crypto market has come under strong selling pressure after the US DOJ sent a subpoena notice to Nvidia wiping out more than $1 trillion from the

The crypto market witnessed a steep decline as a result of the U.S. Department of Justice (DOJ) issuing a subpoena to Nvidia over antitrust concerns. This news wiped out over $1 trillion from the U.S. markets. Anticipating the Fed rate cuts to bolster market liquidity, some market analysts maintain that these cuts will only provide temporary relief due to the underlying weakness in the U.S. economy and the impending recession.

Fed Rate Cuts May Not Avert US Recession

With just fifteen days to go before the Fed begins its rate cutting cycle, market analysts are turning to historical charts to observe the impact of previous rate cuts. Among these analysts is Brett (@brett_eth), who highlights similarities between the current economic climate and those during past interest rate-cut cycles in 1981, 1990, 2000, and 2007.

He notes that indicators such as a rising unemployment rate and a 10-year to 2-year yield curve inversion are mirroring trends observed during these earlier cycles. While optimism surrounds the Fed rate cuts, suggesting they could be beneficial for the market, Brett's analysis points to a different development.

According to Brett, the market experiences a short-term boost, lasting around 25 days post-rate cuts, followed by an average 13-month downturn. He adds that there might be one last market rally around the upcoming rate cuts.

Meanwhile, the Bank of Japan plans to raise interest rates as part of its hawkish monetary policy, which could put further pressure on the USD and the U.S. markets.

Will Nvidia Be the Catalyst for the Market Crash?

Nvidia shares dropped 10% yesterday after the U.S. Department of Justice (DOJ) issued a subpoena to the chipmaker as part of an antitrust probe. The DOJ is specifically examining Nvidia's dominance in the AI computing market, with antitrust officials expressing concerns that the company may be making it difficult for customers to switch to other suppliers.

It is also alleged that the chipmaker may be penalizing customers who don't exclusively use its AI chips, thereby hindering the entry of competitors. Notably, prior to the 2000 tech bubble burst, the DOJ conducted a similar antitrust probe involving Microsoft, leading some market analysts to speculate that the Nvidia subpoena could be a catalyst for the next U.S. recession and whether the Fed rate cuts will be able to avoid this scenario.

A previous Business Insider reporter suggested that Microsoft is the mystery customer of Nvidia driving 19% of its sales. If true, this won't go well with the regulators.

In other news, recent crypto market crashes have led to massive Bitcoin liquidations with BTC price losing key support and eyeing a 75% correction, While Peter Schiff shared a chart indicating a strong gold rally in the making.

This graph shows the breakdown of the positive correlation between gold ETF holdings and the price of #gold. The breakdown occurred in 2022 and became especially negative in late 2023. It only recently turned back positive. This means the gold rally is about to gain momentum. pic.twitter.com/5xjee92FiX

— Peter Schiff (@PeterSchiff) September 3, 2024

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