Bitcoin has slowly recovered from its price decline in the past three days, and the overall market price has remained stable. Most community analysts point to the fact that the current stock market and crypto market are fluctuating in line with the general economic data, because this week’s general economic data does not have much impact. Surprisingly, the overall price change was the same as last week, with Bitcoin remaining at $62,000 and Ethereum at $2,400. Investors have speculated whether the U.S. economy will decline, whether the job market is stable, and whether the Fed is willing to bear higher price inflation. risks to cut interest rates to avoid the risk of recession.
If you want to speculate on the Fed's thoughts on interest rate policy, institutional investors no longer look at the simple price index (CPI), but focus on the details of the price index, making the situation more complicated and making investments in the US stock and cryptocurrency markets more complicated. The difficulty level entered another scenario after the Fed announced a two-digit interest rate cut, and the difficulty level increased a lot. Next, we will talk about the focus of the subsequent encryption market.
We have previously mentioned that the Fed is betting on "continued decline in energy prices" and adopting two parallel strategies of "precautionary interest rate cuts". First of all, the Fed has actually believed that the previously strong U.S. economy has some signs of reaching the end of its strength. From the manufacturing and consumer confidence indicators, The employment report showed a trend of weak growth. However, at this time, international crude oil prices continued to fall, with the lowest even falling below US$70, a drop of more than 40% compared to US$120 in 2022.
It is worth noting that the Bitcoin spot ETF is still in a state of adjustment this week. Only after the eye-catching employment data was released on October 7, the possibility of a soft landing for the U.S. economy increased greatly, inspiring Bitcoin to rise to $64,000. , pushing the day's net capital inflow to US$230 million.
However, later it was reported that the intensification of conflicts in the Middle East may affect oil facilities. The international crude oil price rebounded to US$78. Energy prices rose and inflation was expected to return, undermining the original interest rate cut expectations. The price of Bitcoin fell from US$64,000 to US$59,000. Triggering a wave of forced liquidation by multiple parties.
Subsequently, a ceasefire agreement was reached in the Middle East, causing crude oil prices to fall back to the US$74 range again, and Bitcoin prices also rose back to US$62,000, implying that cryptocurrency prices are indeed partly based on changes in crude oil prices, but in the following days almost all Bitcoin spot ETFs This is a situation of sporadic net outflows of funds, and market investors are constantly speculating on the direction of the Fed's subsequent interest rate policy.
Sources: MICA RESEARCH A. October 07 Funds are in place ahead of schedule, Bitcoin rebounds to $62,500
As China's National Day holiday ends, traders begin to allocate capital positions. The crypto market, which experienced net capital outflows last week, has regained the favor of some crypto funds, prompting Bitcoin to rise from US$60,000 to US$62,500. Due to the bright US economic data last week, It is very likely that funds will begin to flow back from China to the United States, which will also drive up the price of the crypto market. Some funds have already begun to switch from stable coins to Bitcoin and other small and medium-sized cryptocurrencies.
Historically, Bitcoin has performed better in the fourth quarter. After experiencing the decline in September, October has become a good starting point. The focus this week includes the price index (CPI) and unemployment benefits on October 10. The number of claims and the consumer confidence index on October 11.
According to a report released by Cryptoquant over the weekend, they found that short-term holders (holding Bitcoin for less than 155 days) have recently increased their risk or increased their buying, indicating a surge in buying activity, indicating that investors are more optimistic about the market sentiment. Start buying Bitcoin again, and subsequent U.S. economic data will affect investors' bets on the U.S. economy. Although the current data looks good, it still depends on how the market interprets it.
B. On October 8, international crude oil prices soared, extinguishing market expectations for a significant interest rate cut by the Fed.
As the war in the Middle East expands, several recent events are causing market concerns about global oil supply. Part of the current Fed's strategy of sharply cutting interest rates is to bet on falling international energy prices, thereby suppressing inflation. However, after oil prices have been falling all the way, last week The price per barrel rebounded by 9% after Saudi Aramco announced an increase in the official selling price of Arabian Light crude oil sold to Asian customers in November.
This has led to a further increase in international oil prices. Currently, Brent oil prices are close to 80 US dollars per barrel, and New York West Texas crude oil has reached 76.4 US dollars. Although it is only a rebound, the market's expectations for interest rate cuts are too strong now, and it is unlikely to tolerate a rebound. Aramco The price of Arab light crude oil sold to Asia in November was raised by US$0.9 per barrel, exceeding market expectations. The selling prices of other varieties such as ultra-light crude oil were also raised.
The market also attributed part of the rise in oil prices to the escalating conflicts between Israel, Iran, and Hezbollah in Lebanon. The market is worried that Israel may launch air strikes on Iranian oil facilities, which will further hit the Iranian economy and push up oil prices. Goldman Sachs investment bank warned that if Iranian oil facilities are attacked, oil prices may rise by $20 next year. After investors digested this information, the ten-year U.S. bond yield climbed to more than 4%, and the price of Bitcoin also retreated from $64,000 to $62,000.
C. October 10 Bloomberg: Futures options commodities for Bitcoin ETF will be launched in the first quarter of 2025
Since the listing of Bitcoin spot ETF, options and futures products for Bitcoin ETF have not yet been launched on the market. However, according to Bloomberg Intelligence analyst James Seyffart, Bitcoin ETF options and futures are expected to be the first in 2025. He believes that although it is possible to launch before the end of this year, it is more likely to be listed for trading in early 2025.
The U.S. Securities and Exchange Commission (SEC) has approved Nasdaq to list options related to BlackRock’s Bitcoin ETF in September 2023. Subsequent approvals from the Commodity Futures Trading Commission (CFTC) and the Options Clearing Corporation (OCC) are still required. Final approval. Unlike the SEC, the CFTC and OCC do not have strict deadlines, so approvals may be delayed and the timing of listing remains uncertain.
At present, institutional investors are not able to hedge Bitcoin ETFs through the U.S. financial market. The corresponding futures and options will provide more diverse ways for institutional investors to manage their crypto asset positions after they are listed, said Jeff Park, head of strategy at Bitwise Invest. pointed out that this indicates that the Bitcoin-related derivatives trading market can significantly grow while reducing default risks. According to the 2023 Transaction Access Survey, more than 10% of financial advisors surveyed have used options to manage client portfolios, which is important for Stability in the Bitcoin market will help.
"Oil prices" and "employment report" are the focus of observation
Under this assumption, the Fed certainly chose to cut interest rates to prevent a potential recession crisis. In particular, the manufacturing index and employment reports in the past two months are no longer as prosperous as the tightening labor market in the past. Although the overall situation is still very stable, it is no longer It's as good as before. In addition, U.S. manufacturing activity continues to decline. The Fed also sees that the unemployment rate is 4.1%, which has increased significantly from 3.4% in April this year. At this time, it chooses to cut interest rates and slowly explore a soft landing. is a wiser choice.
Now that the situation in the Middle East has been relatively stable, there are unlikely to be any incidents such as attacks on oil facilities in the short term. In addition, OPEC's plan to increase oil production will continue. It is foreseeable that energy-related prices will continue to fall. The Fed will naturally have more Big chips rely on falling energy prices to offset the potential inflationary impact of interest rate cuts. In other words, even if the core price index excluding energy and food continues to rise, as long as energy prices fall, overall U.S. inflation can remain stable.
The price index just announced is also very interesting. Although the overall monthly growth continues to maintain 0.2%, the annual growth rate is still stuck at 2.4%. The annual growth rate of the core price index also remains at 3.3%, but the monthly growth rate of the rent index is only 0.2%. Compared with the 0.5% growth rate in the past, which has slowed down significantly, the Fed hardly needs to worry about the core inflation index. It only needs to maintain the original script. Under the premise of a high base period, the annual price growth rate will return to below 2% sooner or later, making The chances of a soft landing are increasing.
Under this circumstance, the Fed will definitely choose to rely on "falling oil prices" to protect "employment." The Fed's biggest goal at present is to prevent the U.S. economy from falling into recession. Assuming that a soft landing can be successfully achieved, this term of officials will gain a lofty historical position. Therefore, the possibility of subsequent interest rate cuts is definitely far greater than maintaining the same rate, and raising interest rates is even more impossible. Therefore, no matter how the price index opens, the mid- to long-term trend will drive the price of risky assets to rise, and the price of Bitcoin will rise with the interest rate cut. .
We still set the current reasonable price of Bitcoin at US$70,000. However, it will not develop linearly. Instead, it will have to break through a certain interest rate cut range before it will respond. It is expected that the price of Bitcoin will fall below 3.50% as the US benchmark interest rate falls. interest rates have climbed higher, but it also involves whether the U.S. economy has entered a recession. Assuming that it has entered a recession, the amount of funds flowing into Bitcoin will also decrease, and the price performance will naturally not be very good. However, if the soft landing succeeds in three years And as the interest rate cuts continue, Bitcoin has a high probability of rising to $100,000.
Review of last week【MICA RESEARCH】The Fed stated that it is not in a hurry to cut interest rates, and cryptocurrencies retreated
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"[MICA RESEARCH] Inflation remains stable, but investors must have more patience with cryptocurrencies." This article was first published on (Block Guest).
