FOMC Results, and Markets Getting Ready for Crypto Winter
The financial markets are exceptionally restless and volatile. Tellingly, there is no unity among financial market participants. As a result, the US stock market and the cryptocurrency market are frantically chatting.
Perhaps the direction will return to the price dynamics tonight. Everyone is waiting with bated breath for the outcome of the two-day meeting of the Fed's Open Market Committee. It would seem that everything is expected – the monetary policy parameters will be left unchanged today. But the markets are not interested in this, but in the future actions of the US Central Bank.
Recall that some analysts are waiting not for 2-3 rate hikes in 2022, but from 5 to 7. In addition, the Fed's comments on the reduction of the Central Bank's balance sheet will be extremely important: when will it start? What scale does it provide? In general, markets are waiting for a signal from the Fed about the level of aggressiveness of the Central Bank.
If the FOMC is focused on inflation and is ready to act as quickly as possible, then we will see a new round of sales of risky assets. But if the US Central Bank shows uncertainty and tries to take a wait-and-see attitude, there may well be cries of “buy a drawdown” in the markets.
Taking into account the scale of inflation, its uncontrollability and obvious tendencies for further growth, we are inclined to the first option and prefer selling risky assets to buying them.
After Bitcoin peered into the abyss on Monday, the situation somewhat stabilized and improved. But the losses of the cryptocurrency market are still very massive. And if the growth of inflation stimulates the growth of inflation, then the fall of the crypt stimulates the fall of the crypt. Let's take mining for example. Paying the already increased electricity bills at the price of bitcoin under 70K and around 35K are two big differences. Fewer miners means less hashrate. Less hashrate - the network works worse. Well, do not forget that the vast majority of cryptocurrency buyers are fans of fast money, and when the crypt is not only growing, but falling, you can’t earn not only fast money on purchases, but also no money at all. This means that the number of buyers will physically decrease, and we may well see a repetition of 2018-2019, when the crypt suddenly became uninteresting to most participants in the financial markets, bitcoin was freely sold at 3-4K and no one was excited about the word at all.
Perhaps the direction will return to the price dynamics tonight. Everyone is waiting with bated breath for the outcome of the two-day meeting of the Fed's Open Market Committee. It would seem that everything is expected – the monetary policy parameters will be left unchanged today. But the markets are not interested in this, but in the future actions of the US Central Bank.
Recall that some analysts are waiting not for 2-3 rate hikes in 2022, but from 5 to 7. In addition, the Fed's comments on the reduction of the Central Bank's balance sheet will be extremely important: when will it start? What scale does it provide? In general, markets are waiting for a signal from the Fed about the level of aggressiveness of the Central Bank.
If the FOMC is focused on inflation and is ready to act as quickly as possible, then we will see a new round of sales of risky assets. But if the US Central Bank shows uncertainty and tries to take a wait-and-see attitude, there may well be cries of “buy a drawdown” in the markets.
Taking into account the scale of inflation, its uncontrollability and obvious tendencies for further growth, we are inclined to the first option and prefer selling risky assets to buying them.
After Bitcoin peered into the abyss on Monday, the situation somewhat stabilized and improved. But the losses of the cryptocurrency market are still very massive. And if the growth of inflation stimulates the growth of inflation, then the fall of the crypt stimulates the fall of the crypt. Let's take mining for example. Paying the already increased electricity bills at the price of bitcoin under 70K and around 35K are two big differences. Fewer miners means less hashrate. Less hashrate - the network works worse. Well, do not forget that the vast majority of cryptocurrency buyers are fans of fast money, and when the crypt is not only growing, but falling, you can’t earn not only fast money on purchases, but also no money at all. This means that the number of buyers will physically decrease, and we may well see a repetition of 2018-2019, when the crypt suddenly became uninteresting to most participants in the financial markets, bitcoin was freely sold at 3-4K and no one was excited about the word at all.
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