FED: Expecting the Expected

Crypto Compass 81

markets

"Tell me and I forget. Teach me and I remember. Involve me and I learn." - Benjamin Franklin

🇨🇭 Join our Swissblock Telegram Group! Get daily updates, in-house content, and technical analysis on crypto & macroeconomics. Tap into a hub of knowledge and insights. Stay ahead with Swissblock. Sign up now! 🚀

• BTC has dropped from its recent peak above $44k, but it is still up more than 50% in two months in the latest stage of this year's rebound, which has triggered predictions for a new bull market.

• After an impressive rally, the recent price correction seems more like profit-taking by short-term investors and traders. We don't see deleveraging in the market; crypto traders continue taking an elevated risk. For this reason, we might see even higher volatility shortly.

Figure 1: BTC's price evolution with Cipher B, RSI and ATR indicators.

• We have witnessed many favourable inflation prints since the last Fed meeting, notably recent decreasing prices and weakening growth indicators. These have strengthened expectations that the Federal Reserve would lower interest rates multiple times next year.

• The $44k mark and above should be critical since mid-term investors have their realized price at that level, which is becoming increasingly significant given that this cohort controls over 16% of the active supply.

Figure 2: Probabilities of changes to the Fed rate and U.S. monetary policy, as implied by 30-Day Fed Funds futures pricing data.