Fed Has A Safe Landing

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2022-07-19 18:26:52

Market situation

Bitcoin has risen slightly to around $39,000. Altcoins also rose slightly in the same trend.

US stocks rose slightly in the Dow Jones and S&P 500 indexes in the past day. Futures markets were more upbeat and bullish in all three indexes. Oil fell slightly to 100 USD/barrel. And gold down to 1883 USD / ounce.

The earnings report information of major companies continues to be a factor affecting US stock market prices as well as crypto. Meta (Facebook) earnings report is pretty good. Meta’s earnings per share were $2.72, up from $2.56 expected. However, total revenue was only 27.91 billion USD while investors’ expectation was 28.2 billion USD. Plus, daily active users rebounded slightly from 1.93 billion in Q4 2021 to 1.96 billion. But monthly active users fell short of expectations of 2.97 billion people and came in at only 2.94 billion.

With this business result, the CEO of Meta, Mark Zuckerberg, attributed this decline to both internal and macro factors. Recently, Facebook has focused on short videos, but advertising revenue is lower than traditional advertising services. Along with that, Facebook is also dealing with privacy changes in iOS when Apple prevents Facebook from collecting users’ private information. This makes advertising for iOS users ineffective and reduces revenue.

Like Snap and Google, Facebook is also being affected by Russia’s invasion of Ukraine. So Facebook blocked in Russia and the social network stopped accepting ads from Russian advertisers globally and lost this part of the revenue.

Up to this point, the prices of many stocks of large technology companies in the world have returned to the level of May 2020, returning the growth of the past two years. However, BTC compared to two years ago has achieved a huge growth from about $ 4,000 to now $ 39,000.

Fear of financial recession

Deutsche Bank predicted a deeper recession than its previous forecast for the US economy in a report to clients. Deutsche Bank economists have warned that the US will suffer a major recession next year. The bank also believes that the sooner and more aggressively the Fed acts, the less damage it will do to the economy in the long run. The tightening of the currency, raising interest rates is what the Fed needs to do. Currently, US inflation is at a high of 8.5%.

However, several other major investment banks, including Goldman Sachs and JPMorgan, are less pessimistic about the future outlook of the US economy. Goldman Sachs recently estimated there is a 35% chance of a recession in the next two years. The bank also acknowledged that it would be difficult to reduce high inflation.

Fed Chair Jerome Powell also emphasized that the central bank is willing to raise interest rates continuously. The Fed’s expected increase will increase by 0.5% to control inflation. Many have commented that the Fed’s most difficult job is to raise interest rates without pushing the US economy into a recession, what economists call technically a “safe landing”. Because, if the Fed does not raise interest rates, inflation continues to rise, leading to a financial crisis. And the Fed raises interest rates to adjust inflation, if it increases too quickly, it also makes a financial crisis possible.

With his personal opinion, Thuan said that financial crisis often occurs when investors least expect it. When the market very few people think that a financial crisis will happen. The market in the short term is often unpredictable and there may be unexpected events that can happen, such as epidemics, wars, etc. Then the person who has the knowledge, knowledge and preparation will be the one who will Seize the opportunity whether the market is up or down.

Like Michael Burry, who has been shorting the US real estate market since 2005 because he found the US real estate market to be too high. He was steadfast in his analysis and judgment and achieved great results in 2008 when the financial crisis hit. From the knowledge, judgment and perseverance that helped Michael Burry’s investment fund succeed and raise more than 700 million USD in 2008.

Another venture capitalist, Mike Novogratz, founder and CEO of Galaxy Digital, entered the crypto market early on. He bought 30,000 Bitcoins (BTC) and half a million Ethereum (ETH) between 2013 and 2017. With his steadfast hold and belief in the bull market, by 2020 his investment has paid off.

Therefore, one thing Thuan always emphasizes is that when entering the market, learn and equip yourself with the necessary knowledge. At the same time, choose for yourself a suitable and right investment direction and keep your beliefs. Thuan believes that the uptrend is the long-term trend of BTC. So, over the years, Thuan has been averaging prices into BTC and crypto regularly and believes in the long-term growth of this market.

Some other information:

  • The world’s first Bitcoin (BTC) spot exchange-traded fund (ETF) is buying back BTC after a month of selling. Data from on-chain custodian resource Coinglass confirms that on April 27, the Canada Purpose Bitcoin ETF added 1,132 BTC to its holdings.

  • Fidelity, the largest retirement investment plan provider in the United States, has announced plans to offer Bitcoin in 401(k) retirement accounts to its account holders later this year. The company is set up to allow investors to allocate up to 20% of their 401(k) accounts to Bitcoin depending on the company.

  • Fireblocks, a digital asset custody platform, has announced that it has given decentralized financial institution (DeFi) access to Terra (LUNA), the second largest DeFi protocol by total value. locked (TVL). The company invested more than $250 million in the Terra DeFi ecosystem within the first 72 hours of the integration going live.

  • Speaking at Crypto Bahamas, Cathie Wood and Mike Novogratz both said that they think Bitcoin could hit $1 million in the future, the two also talking about the potential of Web3 as well as NFT. This reflects on the increasingly important role of Bitcoin in the US economy and political landscape.

  • Fort Worth, Texas, is now the first city government in the United States to mine Bitcoin. Mayor Mattie Parker oversaw the construction of a small mining area at City Hall with the first three miners operating.

  • The New York State Assembly has passed a bill to block new cryptocurrency mining facilities using non-renewable energy sources from establishing mining facilities in the Empire State. The law will impose a two-year ban on new cryptocurrency miners using a carbon-based energy source, leaving existing companies unaffected.

  • The latest data shows that Bitcoin mining may not be harmful to the environment. In fact, a report published by the Bitcoin Mining Council (BMC) on April 25 found that the electricity usage of the Bitcoin network dropped by as much as 25% in the first quarter of 2022 compared to in the same period last year. It is estimated that 58.4% of the electricity used to mine BTC comes from clean energy.

  • Brazil’s Senate has passed the nation’s first bill on cryptocurrencies in a plenary session, which will set the stage for the creation of a regulatory framework for the country’s cryptocurrency industry. Brazil will closely follow the largest economies in the world and facilitate BTC mining on Brazilian soil.

  • Mexico’s Senate building is now home to the country’s 14th Bitcoin (BTC) ATM, a sign of the country’s growing interest in Bitcoin. The ATM was installed on Tuesday with the support of several lawmakers, including Miguel Angel Mancera, the head of the parliamentary group of the Democratic Revolutionary Party (PRD).

  • A new upgrade on Cardano has increased the block size of the network by 10%. After the update, the block size has now increased from 80KB to 88KB. With that, Wanchain and Cardano’s Input Output are working together to enable interoperability between the Cardano mainnet, Cardano sidechains, and other blockchain networks.

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