Why did a sharp drop happen this round? Let’s break it down from a macro perspective
The U.S. economy is too strong—it’s actually a downside risk 🥶 Why might the Fed raise rates for the second time in a row?
Yesterday, the U.S. released a very important piece of data.
Flash Composite PMI—
That’s the name in Chinese: “Composite Purchasing Managers’ Index.”
You don’t need to memorize it.
Just know this:
It’s used to judge whether U.S. companies are doing well right now.
Above 50 means the economy is expanding.
The latest figure is: 58.4.
And it’s also: the highest since July 2021.
Normally, if the U.S. economy is this strong, shouldn’t that be good news?
So why did stocks drop? Why did BTC drop? Why did ETH drop too?
This is the most unusual thing in this year’s financial markets.
Because what the market fears most right now is not:
A U.S. economic slowdown.
It’s that:
The U.S. economy is too strong.
Why?
If the economy is too strong,
that means: consumers are still spending.
Companies are still expanding.
And demand is still very strong.
When demand is too strong,
inflation can’t come down quickly.
If inflation doesn’t fall,
what can the Fed do?
Keep interest rates high.
Even:
Keep raising rates.
So after this data came out yesterday,
the market’s expectations for the Fed:
Another rate hike in October
jumped to about:
70%.
Pay attention.
Last week, the Fed had just:
Raised rates by 25 basis points.
If it hikes again in October, then it means:
A second consecutive rate hike.
That’s obviously not good news for the crypto market.
Because when U.S. Treasuries can offer you:
Close to a 5% return,
fund managers will ask:
“Why should I take such a huge risk to buy a high-volatility asset?”
So what happened yesterday?
The yield on the 10-year U.S. Treasury:
Rose to near the highest level since 2007.
The U.S. dollar:
Close to a two-month high.
BTC’s biggest opponent right now isn’t some altcoin,
or some exchange.
It’s:
the U.S. interest rates.
$BTC $ETH $ZEC
The U.S. economy is too strong—it’s actually a downside risk 🥶 Why might the Fed raise rates for the second time in a row?
Yesterday, the U.S. released a very important piece of data.
Flash Composite PMI—
That’s the name in Chinese: “Composite Purchasing Managers’ Index.”
You don’t need to memorize it.
Just know this:
It’s used to judge whether U.S. companies are doing well right now.
Above 50 means the economy is expanding.
The latest figure is: 58.4.
And it’s also: the highest since July 2021.
Normally, if the U.S. economy is this strong, shouldn’t that be good news?
So why did stocks drop? Why did BTC drop? Why did ETH drop too?
This is the most unusual thing in this year’s financial markets.
Because what the market fears most right now is not:
A U.S. economic slowdown.
It’s that:
The U.S. economy is too strong.
Why?
If the economy is too strong,
that means: consumers are still spending.
Companies are still expanding.
And demand is still very strong.
When demand is too strong,
inflation can’t come down quickly.
If inflation doesn’t fall,
what can the Fed do?
Keep interest rates high.
Even:
Keep raising rates.
So after this data came out yesterday,
the market’s expectations for the Fed:
Another rate hike in October
jumped to about:
70%.
Pay attention.
Last week, the Fed had just:
Raised rates by 25 basis points.
If it hikes again in October, then it means:
A second consecutive rate hike.
That’s obviously not good news for the crypto market.
Because when U.S. Treasuries can offer you:
Close to a 5% return,
fund managers will ask:
“Why should I take such a huge risk to buy a high-volatility asset?”
So what happened yesterday?
The yield on the 10-year U.S. Treasury:
Rose to near the highest level since 2007.
The U.S. dollar:
Close to a two-month high.
BTC’s biggest opponent right now isn’t some altcoin,
or some exchange.
It’s:
the U.S. interest rates.
$BTC $ETH $ZEC