Why is the price of Bitcoin on a roller coaster? What signals did the Federal Reserve release last night?
Today is Thursday, June 13, 2024. Two major macro events finally landed last night. First, the inflation rate in the United States in May was 3.3%, which was lower than the expected 3.4%. The decline in inflation rate indicated that the Federal Reserve would consider cutting interest rates as soon as possible. The yield of the US 10-year Treasury bond and the US dollar index fell sharply. On the contrary, this was good for the cryptocurrency market. Bitcoin rose from $67,500 to a maximum of $70,000 in a short period of time.
The 4-hour RSI trend also rebounded from the previously oversold and underestimated level to a relatively neutral level. At this point, it rebounded almost as expected, but the $70,000 did not last long. 5-6 hours after the inflation data was released, the Fed's interest rate decision and press conference had results. To be honest, this FOMC meeting still maintained the interest rate unchanged, but Fed Chairman Powell was hawkish. He said that the CPI inflation rate this time has declined, but it is still too high. It is necessary to reach the 2% inflation target before considering a rate cut. When he was asked whether the core inflation PCE data would drop significantly, the Fed's answer was that there was not much confidence. Finally, the Fed's latest dot plot showed that there would only be one rate cut this year, which was further lowered compared to the expectations in March. So in general, the CPI inflation rate in May was good, and the Fed's interest rate meeting was in line with expectations, but it released too many hawkish signals, which eventually kicked Bitcoin back to the starting point and was finally supported by the MA200 moving average. I would like to add that the inflation rate forecast for June will be released on July 11. I saw one of the forecasts is 3.1%, which means that the inflation rate will drop significantly. This is quite abnormal. Usually, this mainstream forecast will be seen at the beginning of next month, and June is just halfway through. If the inflation rate can drop significantly in June, Bitcoin is expected to break through a new historical high.
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