Fed rate hikes

On July 26, 2023, the Federal Reserve raised interest rates by 25 basis points. Although inflation showed signs of moderation, the month-on-month CPI (YOY) inflation fell to 3% in June. Fed Chairman Powell said that there is still a long way to go to get inflation back to 2%. On the other hand, the Federal Reserve continued to reduce its holdings of Treasury bonds, agency bonds, and real estate mortgage securities. After the announcement, the Chicago Mercantile Exchange FedWatch tool reflected that the market expected the FOMC to further raise interest rates by 25 basis points in September.

Relative Volume and Volatility of Major Cryptocurrencies

Over the past week, the annualized volatility of Bitcoin, Ethereum, and Bitcoin Cash has declined. Bitcoin has been consolidating throughout July, and its annualized volatility has fallen to a quarterly low. However, Litecoin's volatility has increased, which can be attributed to its upcoming halving event in August, which has led to increased price fluctuations.

Bitcoin vs Litecoin Correlation

Litecoin has shown high levels of volatility since May. We can see that the price of Litecoin and the price of Bitcoin decoupled during some periods, but the correlation coefficient will still be maintained at around 0.8 in response to the trend of Bitcoin.

Bitcoin transaction volume distribution chart

Bitcoin's volume is divided into its distribution and range to provide insights. The red line in the chart shows the Volume Point of Control (VPOC), which represents the price level with the highest volume during a specific period. The VPOC represents the price point with the highest volume, at which a large number of market participants are willing to trade.

The volume distribution chart shows two noteworthy areas of volume concentration:

1: $27,000-$28,000 from mid-March to mid-June,

2: And the current trading volume concentration area is located at 30,250.

In addition, the VPOC for the second quarter of 2023 is $28,000, which is an important indicator of Bitcoin's fair value, as the most trading volume accumulated at $28,000 between March and July. If Bitcoin's VPOC for the second quarter of 2023 is higher, it indicates that the market's fair value of Bitcoin has increased in the third quarter, which is a positive sign for investors. On the contrary, if the price breaks below and fails to maintain this level, it indicates that the market is re-exploring the discounted fair value.

Disclaimer:

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