Cryptic ball: sell the bearish rumour.
I apologise for today's delay but I had to wait for the US Fed's FOMC press conference to be over. As explained here over the past months, this important meeting takes place eight times a year and influences the fate of global markets. Since the end of summer, speculation that the Fed was going to start withdrawing its monetary stimulus programs by the end of the year created havoc in all risky assets, from tech stocks to bitcoin, as these benefit the most from the wild money printing activities designed to sustain most of the world economy.
Today, after many warnings, the Fed's chair confirmed that it was indeed "reducing the pace of its net asset purchases", given that inflation is rising and the US economy is recovering. In other words, they will cut their market pumping inflows from $120 billion a month to just $15, aiming to close the program in mid-2022. This sounds bearish, but market participants had incorporated such expectations over the past fortnights and nothing, but bitcoin, crashed.
The original cryptoasset fell 4% in just under 5 minutes, exactly half an hour before the press conference started. But that is the typical volatility that any trader should be used to before such events. Curiously, the rest of the crypto market didn't follow and bitcoin recovered in full shortly after, which is a clear sign of the ongoing alt season. Also, both ETH and SOL just printed a new all-time high, while yesterday's highlight, LRC, is now falling - just as anticipated.
What next? The S&P 500 has also just printed a new all-time high and I feel global equities will continue to rally until the US Fed starts hinting at the most dangerous of the policy changes: a change in the interest rate. Currently, this is still set near zero, but if inflation fears keep increasing the Fed will most likely hike it - even if the job market isn't fully recovered. And that will be the end of the party. It won't happen this year and maybe not even in the next. Until then, or until everyone takes profits to buy Christmas presents, this is a clear victory of bulls over bears. Meanwhile, it's time to enjoy the gains, wishing a Happy Diwali to you all!
Chart art: but buy the bearish news.
Three things: longed hocus-pocus here.
- William Peaster teaches you how to borrow against your crypto collateral with Abracadabra. Sounds dangerous? It's "Magic Internet Money".
- Vitalik Buterin muses about "crypto cities". Sounds interesting? That's because cities can implement radical crypto policy with relative ease!
- Yassine Elmandjra provides a "framework for valuing Bitcoin". Sounds useful? That's because it is, at least for investment fund managers.