The Fed is pausing rate hikes—can the crypto market finally breathe a sigh of relief?
The most frustrating thing about this market cycle is that expectations for an October rate hike have fallen, but the market still hasn’t eased up. In September, the Fed raised rates by 25 basis points to 3.75%–4%. The latest minutes show that most officials still believe another rate hike this year may be appropriate. A temporary pause is still a long way from monetary easing.
Look at the actual data: during Asian trading hours on October 8, the U.S. Dollar Index was around 102.25, the U.S. 10-year Treasury yield rose to 5.303%, BTC was around $82,360, and ETH around $2,554. The market-implied probability of no rate hike in October has already reached 81.7%, but the dollar and Treasury yields remain elevated, and crypto assets are still under pressure.
My view is that from here, we can’t focus only on whether the Fed raises rates. We also need to watch for signs that financial conditions are improving. A strong dollar and high yields make rallies more likely to run into selling pressure. Expectations of a rate-hike pause alone aren’t enough to confirm that the market is turning stronger.
The next key event is the U.S. CPI release at 8:30 p.m. Beijing time on October 14. Whether inflation continues to cool is what will give the market a basis for reassessing its expectations. When trading in this environment, what matters more than trying to guess what the Fed will do is not letting your positions gamble on the answer for you.#美联储纪要聚焦10月暂停加息
The most frustrating thing about this market cycle is that expectations for an October rate hike have fallen, but the market still hasn’t eased up. In September, the Fed raised rates by 25 basis points to 3.75%–4%. The latest minutes show that most officials still believe another rate hike this year may be appropriate. A temporary pause is still a long way from monetary easing.
Look at the actual data: during Asian trading hours on October 8, the U.S. Dollar Index was around 102.25, the U.S. 10-year Treasury yield rose to 5.303%, BTC was around $82,360, and ETH around $2,554. The market-implied probability of no rate hike in October has already reached 81.7%, but the dollar and Treasury yields remain elevated, and crypto assets are still under pressure.
My view is that from here, we can’t focus only on whether the Fed raises rates. We also need to watch for signs that financial conditions are improving. A strong dollar and high yields make rallies more likely to run into selling pressure. Expectations of a rate-hike pause alone aren’t enough to confirm that the market is turning stronger.
The next key event is the U.S. CPI release at 8:30 p.m. Beijing time on October 14. Whether inflation continues to cool is what will give the market a basis for reassessing its expectations. When trading in this environment, what matters more than trying to guess what the Fed will do is not letting your positions gamble on the answer for you.#美联储纪要聚焦10月暂停加息