Last night was really like heaven and hell, 20:30-2:00, 2:00-now, two completely different market conditions.
After the CPI data came out, BTC immediately shot up a big positive line from 67,000 to 70,000. After Powell started speaking, it went directly from nearly 70,000 to 65,000, which was like heaven and hell.
What type of rate cut is most likely in 2024:
Based on the current economic background and the Fed’s policy guidance, there are two main types of interest rate cuts that the Fed may adopt in 2024:
Preventive interest rate cuts and counter-cyclical interest rate cuts.
Preventive rate cuts:
Despite the strong economic performance, inflationary pressures and global economic uncertainty remain. If the Fed wants to take action before the economy slows down significantly, a precautionary rate cut is a possible option.
Counter-cyclical rate cuts:
If economic data deteriorates significantly in the next few months (such as slowing GDP growth, a weak job market, or a rapid decline in inflation), the Fed may adopt countercyclical interest rate cuts in response to an economic recession or significant slowdown.
The Fed’s interest rate cuts in 2024 are likely to be mainly precautionary or countercyclical.
These two types of rate cuts have different short-term and long-term effects on Bitcoin prices.
Preventive rate cuts
It could drive Bitcoin prices higher in the short term by boosting market confidence and increasing liquidity, and support its use as a hedge against a depreciating U.S. dollar in the long term.
Counter-cyclical rate cuts
It is possible that increased safe-haven demand and expectations of long-term loose policies will support Bitcoin's good price performance during periods of economic uncertainty.
Generally speaking, interest rate cuts and money releases will bring more US dollar liquidity, and more funds will enter the crypto market, thus bringing about a surge in prices.
In May, I shared in the trading group the possibility of accelerated decline in CPI. The logic was based on the fact that European CPI began to decline at an accelerated pace after going through the most difficult period of high inflation.
Europe's macro data and policies are one step ahead of the United States, whether it is inflation or interest rate cuts.
Before the US election (November), there was a very certain expectation that the ETH spot ETF would be approved and interest rates would begin to be cut. The market expected that the probability of a rate cut on November 8th had reached 100%.
There will still be a short-selling market in the future, but in fact, there is no substantial negative news. The large short positions of institutions reported in the news are just smokescreens to cover up the real positions and attract counterparties to trade. Otherwise, the positions cannot be opened, and you are just providing liquidity.
If interest rates are raised for a long time, they must be lowered, and if interest rates are lowered for a long time, they must be raised. This is the economic cycle and the law of nature. It cannot be changed by a few words. The reason is actually very simple, so don't question whether the big bull will come.
The epidemic actually brought about two bull markets. One was the massive money printing in 2021, and the other was the interest rate cut after more than a dozen interest rate hikes. It was just a matter of time.
Have you noticed that the current interest rate cut has a particularly large impact on the market and is particularly difficult to operate? That is, as the bull market is getting closer and closer, all kinds of funds are ready to move.
Buying the bottom in batches is the best way to arrange spot transactions at the moment. As I said before, don’t miss the opportunities brought by every decline!
For those who fail to seize the opportunity to enter the market, follow us and take advantage of the short-term rebound!
In the short term, we must seize such opportunities. As for long-term planning, we should add a part of our positions every time the market falls, and prepare at least 3 opportunities to add positions!
Choosing a currency for long-term layout is a technical job, otherwise even if you add more positions, it will still fall! It is really important to choose popular currencies in popular sectors!
In short, if you want to buy at the bottom, the position is very important. If you want to play for the long term, choosing the currency is very important! If you can't play by yourself, choosing who to follow is very important!
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