1. The Fed paused its rate hikes in September, and long-term Treasury yields soared

On September 20, the Federal Reserve announced that it would maintain the interest rate in the target range of 5.25% to 5.5%, in line with market expectations. In a press conference after the meeting, Federal Reserve Chairman Jerome Powell emphasized that the committee is closely monitoring current economic data to determine whether they have achieved the expected monetary policy stance. Powell also pointed out that inflation is falling, except for volatile food and energy prices. However, rising energy costs remain a concern, especially considering the recent surge in gasoline prices to 2023 highs.

The 10-year yield has risen steadily over the past few months, reaching a year-to-date high of 4.37% in 2023, surpassing the previous peak of 4.25% set in November 2022. This is the highest level since the Great Financial Crisis in 2008. Despite the surge in yields, the latest COT report shows that asset managers are maintaining long positions in 10-year bonds (expecting a decline in yields). The Philadelphia Fed Recession Probability Index shows a 34% chance of a recession next year. Long bonds are currently overcrowded, and investors expect a potential recession that could force the Fed to cut interest rates. However, Fed Chairman Jerome Powell has stressed that their primary goal is to achieve a soft landing for the economy.

If the market has already assumed that inflation is under control and does not pose a significant threat, it is particularly important to monitor the upcoming Consumer Price Index (CPI) data. However, recent trends show that the year-on-year CPI has increased from 3% in June to 3.7% in August. If the inflation data continues to trend upward, it may prompt the market to re-evaluate the pricing of stocks and risk assets, taking into account the possibility of a prolonged period of rising interest rates.

2. Trading slump Bitcoin trading volume and activity declined

In the first two weeks of September, trading volumes in the Bitcoin spot and perpetual futures markets on Binance declined. Notably, Bitcoin spot market volumes hit a new low for the year, with a total weekly trading volume of approximately 400,000 Bitcoins for BTCUSDT, BTCTUSD, and BTCFDUSD.

3. COT report: Commercial institutions increase bearish bets

The COT report shows that commercial institutions have increased their net short exposure in the past two weeks, and their total net short position has reached the year high in 2023, suggesting a bearish outlook. During the same period, the US dollar index has been on a strong upward trajectory, rising for 10 consecutive weeks.

4. BTCTUSD trading volume transferred to BTCFDUSD

Binance launched FDUSD on August 4th with zero transaction fees (Taker & Maker). Starting from September 5th, the trading volume of BTCFDUSD began to climb, while the trading volume of BTCTUSD decreased at the same time. This shows that the trading activity has clearly shifted to the BTCFDUSD currency pair. Despite this shift, BTCTUSD is still trading at a higher price than BTCFDUSD.

5. BTCFDUSD is trading at a higher price than BTCUSDT (premium)

As trading volume began to rise on September 5, trading activity shifted from BTCTUSD to BTCFDUSD, and BTCFDUSD began to trade at a higher price than BTCUSDT.

6. BTCTUSD remains at a premium despite falling volumes

Starting from September 5, the trading volume of BTCTUSD has dropped significantly, but it is worth noting that despite the drop in trading volume, it is still trading at a higher price than BTCUSDT.

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