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Today I read a post from altFINS about current crypto and macro situation.
Do you think the bear market will continue until FED will end raise interest rates?
The post:
Crypto Market Overview (week 37)
Crypto and equities markets finished the last week with losses, preparing for this week’s FED announcements. Crypto markets dropped heavily with Bitcoin down by over 10% compared to the previous week, closing at 19.419 on Sunday. ETH experienced the biggest slump by almost 25%.
The Merge had successfully taken place on September 15th, 2022, at 08:42:42 GMT+2 at a Block #15.537.393, marking the full transition of the network from Proof-of-Work (PoW) to Proof-of-Stake (PoS), which will cut energy consumption by about 99.95% compared to the PoW consensus mechanism. However, the successful upgrade had not fuelled the Ether’s price further up. Instead, the price remained flat at the Merge event and finished the week down at 1.335. Equities, on the other hand, dropped by around 5% with NASDAQ closing at 11.448 and S&P closing at 3.873 last Friday.
The FED is expected to raise interest rates by another 0.75% this week. The consumer price index, published by the Bureau of Labor Statistics on last Tuesday, increased by 0.1% in August, ending at 8.3%, down from 8.5% in July 2022, but still at four-decade highs. Headline inflation rose 0.1% month over month, even with falling petrol prices.
Core inflation rose 0.6% month over month, translating to an annual increase of 6.3%, up from 5.9% recorded during the previous period. Economists surveyed by Dow Jones had been expecting a decline of 0.1% for overall inflation, with a rise of 0.3% for core inflation. Moreover, Economists polled by Reuters forecast the CPI fell by 0.1% month-on-month in August, resulting in 8.1% for August 2022, down from 8.5% a month earlier.
Despite the drop in gasoline prices, the rise in core inflation fuelled speculation that the FED will have to step up with further rate increases on its next meetings. According to Refinitiv, the new expectations point the federal funds rate to a new target range of 3.80% to 4.20% by end of 2022, with a peak of 3.94% – 4.45% around March 2023.
Overall, the crypto market sentiment (measured by Crypto Fear & Greed Index) continues to stand at 21/100, indicating Extreme Fear, compared to a month ago when the Index stood at 29/100. The total crypto market cap had dropped by almost 10%, crossing below the $1 trillion mark. ETH dominance slightly dropped to 18% (from 20.5%) and Bitcoin went slightly up to 39.4%. As we had pointed out in our previous week’s macro analysis, the ETH Merge was a typical buy-the-rumour-sell-the-news event. The Protocol’s technical upgrade had already been priced in.
WATCH OUT FOR: The next monetary policy meetings are scheduled for September 20-21st, 2022 for the FED and October 27th, 2022, for the ECB. The next US CPI release for September 2022 is scheduled for October 13th, 2022. The next US GDP update will be released on September 29th, 2022, followed by October 27th. 2022.
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