Today is an important day for the financial markets, in 10 hours (18:00 UTC) the Fed will announce a new rate.
98% of respondents expect a +0.25% rate hike from 5.25 to 5.50. More interestingly, it is predicted that this will be the last rate hike in 2023, and at the end of the year, they may even cut the rate a little.
We won’t go into the macroeconomics, but usually, when the rate is raised, the financial markets react by falling.
That is, the financial markets have the following expectations:
+0.25% (projected hike) = controlled market decline
+0.50% = a strong decline in the markets.
But we also need to look at the flip side of the coin.
What if the projected +0.25% rate hike is already “priced in” to the current price? After all, the markets have been correcting for several days.
Then, with the announcement of the 5.50 rate, there will be increased volatility in the markets, but the “market players” will say: oh, great, everything happened as expected, the correction has taken place, and now we can grow.
Or, in an unlikely scenario, Mr. Powell will want to outplay everyone and say: “CPI is at 3%, which is almost 2%, which we have been pushing the economy to for more than a year, so we decided not to raise the rate anymore!” This will simply blow the markets up.
Now let’s take a look at the BTCUSDT chart
On July 24, sellers managed to push the BTC price below the support of the 32-day consolidation in the range of $29500-31500.
It would seem that the first thoughts are: everything is lost, trouble, the sellers have won, you need to sell everything…
But take a closer look, do you see the increased trading volumes at the breakout of $29500? The massive triggering of long stop orders should have accelerated the fall, and there would have been forced liquidation of positions. But we didn’t see anything like that.
Could this be a bear trap?
Today we will get answers to most of our questions:
– If buyers fail to gain a foothold BTCUSDT price above $29700, then the red scenario with targets of $28100 and possibly $27300 will be finally confirmed and activated. We also want to note that we probably shouldn’t expect a BTC price of $20-15-10-7 thousand or whatever guru-influencers-traders predict, because the cost of mining 1BTC is now $20-23 thousand. And then there is also a halving in 9 months, which will increase this cost at least twice.
– If buyers manage to gain a foothold BTCUSD price above $29700, then the blue scenario with a target of $34200 will become completely real.
Now, read the first half of the idea again.
And I would like to conclude with a well-known trader’s phrase: “Buy the Rumor, Sell the Fact”.
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Did you like our analysis? Leave a comment, like, and follow to get more Comment: The main points of the yesterday speech of the Fed Chairman J.Powell:
▪️ FOMC will bring inflation back to the 2.0% target at “any cost” to achieve price stability (current CPI rate of 3.0%);
▪️ Core inflation remains high (current Core CPI rate is 4.8%);
▪️ The 2.0% inflation target is not projected to be reached until 2025;
▪️ Another rate hike at the next meeting is possible, but it will depend on incoming macroeconomic data;
▪️ A lower rate hike this year is not the baseline scenario;
▪️ FOMC no longer forecasts recession in the US;
To summarize:
– There are no promises that everything will be super cool “tomorrow”
– but the worst is over.
– As we suggested in the idea earlier, the markets “digested” yesterday’s event and corrected earlier, so there is a chance for continued growth.
– At night, sellers managed to defend the important $29700 level, but we think that buyers will try to attack upwards again today.
Comment: You can also read our assumptions for 2023-2024-2025, which we wrote 7 months ago, at the end of 2022.
