BITCOIN Waiting for the Fed! – You Can Worry But They Still Accumulate

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2022-07-26 00:51:41

Market situation

Bitcoin continues to move sideways around $37,000 to $38,000. Altcoins also fluctuate slightly.

US stocks were up slightly in all three Dow S&P 500 and Nasdaq indexes. Futures are also mildly green. Oil contract remained flat at 103 USD/barrel. Gold fell slightly to 1864 USD/ounce.

In the face of market anxiety, some information that predicts BTC and crypto prices will continue to decline emerged. The head of crypto arm ARK Invest, Burniske predicts that the prices of the two biggest cryptocurrencies BTC and ETH could bottom out at $20,000 and $1,500 respectively.

Coinshare statistics also show cash outflows from digital asset investment products. At the end of last week, a total of 120 million USD continued to be withdrawn from funds such as Coinshare XBT, 3iQ, 21Shares, ETC Group,… This is the 4th consecutive week, these funds have withdrawn from the portfolio. crypto.

Bitcoin saw most of the money leaving $133 million. This is the biggest one-week pullout since June 2021. It’s difficult to pinpoint the exact reason for this other than the effect of the Fed’s rate hikes and the recent drop in prices.

Ethereum saw a total outflow of $25 million. Most of the major altcoins have small inflows of money leaving. There is inflow in several other altcoins and FTX tokens.

The price drop also led to the rate of BTC profit also decreased to 60%.

Miners showed no signs of fear and continued to increase the speed of mining and accumulating BTC.

Fed rate hikes and recession predictions

The Federal Reserve is expected to raise interest rates for the second time since 2018 after the meeting and is expected to raise rates by 0.5%. It is expected that with this increase in the next meetings, the interest rate will increase to 2.8% by the end of this year. Along with that, the Fed is also expected to launch a program to reduce its massive bond holdings by $95 billion per month starting in June.

The sign the Fed relies on to decide whether to raise rates is some economic growth data slowing while inflation has risen to a record 8.2%. US economic growth fell 1.4% in the first quarter. If growth falls for two consecutive quarters, the economy has fallen into a financial recession. Therefore, by the end of the second quarter, the market will know exactly whether a financial recession will occur or not.

Often investors will make a financial decision before the government officially announces it. This is reflected in the fact that they sell assets and investments such as stocks, bonds, etc., leading to a decrease in stock indexes.

Many policymakers say they want to be neutral in expecting a rate hike to 2.50% by the end of the year. At the same time, it is expected that the Fed will continue to raise interest rates to 3.30% by the middle of next year. Investors expect that the Fed can then control inflation and lower interest rates.

The CNBC Fed held a survey of participants including economists, fund managers and strategists about the effects of a rate hike. The majority in the survey believe the Fed’s tightening campaign will not achieve a gentle landing, instead triggering a recession.

Billionaire hedge fund manager Paul Tudor Jones said the environment for investors is worse than ever as the Fed is raising interest rates as financial conditions become increasingly tight. He thinks investors should look for better assets to invest in. Paul Tudor Jones is also a believer in BTC’s ability to store value and resist inflation better than gold. In 2020, he went public that he was investing in BTC.

Conversely, CNBC’s Jim Cramer said investors should seize the opportunity to buy when stocks fall even if that means accepting some short-term losses. He also said that if you wait until the Fed announces and inflation breaks, it will be too late to buy stocks.

Currently, although there is a sign that GDP growth is negative, inflation has not happened yet. The US jobs report for March was very good. The number of jobs hit a record high of 11.55 million in March, according to a JOLTS Labor Department report. At the same time, the number of jobs exceeded the number of job seekers by 5.6 million workers while the number of people quit was a record.

Some other information:

  • A Forbes article based on a panel of 36 industry experts predicted ethereum’s price to be close to $5,800 by the end of 2022 – double its current level of $2,800.

  • MicroStrategy reported revenue of $119.3 million for the first quarter of 2022, down 3% from the same period last year. Additionally, the company’s Generally Accepted Accounting Principles (GAAP) costs for the first quarter were $275 million, with $170 million in fees due to BTC price drops. MicroStrategy is looking for future profit-making opportunities on the 95,643 BTC holdings of its subsidiary.

  • Banco Galicia, Argentina’s largest private bank, has added the option to buy and sell cryptocurrencies on its platform. The bank added a feature in the investment section of the app for users to buy bitcoin (BTC), ether (ETH), USDC, and XRP. Statista estimates that 21% of Argentina’s 45 million population has been involved in cryptocurrency transactions.

  • After Banco Central de Cuba (BCC), the country’s central bank announced at the end of April that it would issue licenses to digital asset service providers (VASPs). In the future, it is possible that the use of cryptocurrencies will become more and more popular in Cuba to confront the US embargo.

  • Kraken exchange has implemented the NFT marketplace on their app. It can be seen that the heat of NFT has not stopped.

  • The price of Algorand’s ALGO coin spiked after the network revealed that it would be a sponsor of FIFA and help the organization develop its digital asset strategy.

  • The Solana developers have come together on a complex plan to improve the stability of the network after the 7 hour outage. Developers are currently building a more interoperable protocol on top of QUIC – a protocol built by Google, to replace the existing UDP-based protocol that is prone to abuse. They are also building stronger stake-weighted Quality of Service (QoS) that will favor users with higher stake values.

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