Overview
- FOMC review.
- BTC and NASDAQ enjoy a pump
- Risk-on, back on? And for how long
- Altcoins popping off
Chairman of the Federal Reserve, Jerome Powell, otherwise known as J Powell, surprised absolutely nobody yesterday with his announcement of a 50 basis point hike in interest rates – the highest increase since March 2000.
But of course, no surprise meant no nasty surprise – the one thing the market hates above all else.
Still, it was the post-FOMC Press Conference, the ‘presser’, that had investors and analysts holding their collective breaths, and mercifully (for now, at least), the result was overall positive for all markets, with the ever-correlated NASDAQ and Bitcoin both enjoying a healthy pump.
Bitcoin broke out of the descending wedge yesterday, rallying further upon the news that a further rate hike of 75 basis points was, according to J Powell, not up for consideration at this point. With higher rate hikes off the table, risk sentiment has apparently shifted.
So far, this has seemed like a “sell the rumour, buy the news” type of event we were expecting.
The question now is how long the rally can last. And how high Bitcoin can move before encountering any tough resistance.
Other key points:
- FED will begin quantitative tightening in June 2022.
- They’ll reduce the balance sheet by $47.7 billion per month in June, July and August, ramping it up to $95 billion in September.
- This will force downside pressure longer-term, but in the meantime, the reaction to the FOMC still has some time to play out.
- A reduction of liquidity coming from tightening could make it harder for risk assets to run higher, and ultimately fuel demand for dollars.
Still, some analysts are pointing to history to present a potentially bullish recovery scenario:
In other, concurrent news, the DXY has rejected a key resistance level (for now), as investors absorb the Fed’s intended ‘soft-landing’ approach to taming inflation:
Still, it’s a key chart to watch, as consolidation below this level could precede a dollar-wide rally in due course.
In the meantime, we still have another hurdle on the horizon: next week’s inflation data.
Clearly, it will remain high. But to what degree? Bearing in mind that it is a year-over-year measure, and the fact that April 2021 was the time we saw the number leap from roughly 2 to 4 percent, we may have seen inflation peak with the last CPI print:
Crypto Market update 🌍
| Protocol (Coin) | Price ($) | Gain (%) |
| Zilliqa (ZIL) | 0.09603 | +40% |
| Waves (WAVES) | 16.71 | +35 |
| Axie Infintiy (AXS) | 33.51 | +15.90 |
| THORChain (Rune) | 7.38 | +15.56 |
| Ethereum Classic (ETC) | 31.28 | +14.58 |
| ApeCoin (APE) | 16.44 | +14.25 |
| TRON (TRX) | 0.08616 | +13.48 |
| Curve DAO Tokenl (CRV) | 2.61 | +14.68 |
| Tezos (XTZ) | 2.85 | +13.11 |
| ZCASH (ZEC) | 136.19 | +12.42 |
| Uniswap (UNI) | 7.91 | +12.66 |
| GALA (Gala) | 0.1577 | +11.96 |
| Bitcoin Fear and Greed Index | 27 Fear |
| “Crypto” Google Trends | 36 (34) |
| “Bitcoin” Google Trends | 46 (45) |
Newswatch 📰
Adoption story of the day: France has become thew first European nation to grant Binance regulatory.
Meanwhile in the US, California governor Gavin Newsom signs executive order to create a crypto framework.
Coffee giant Starbucks is preparing to enter the NFT space, launching digital items offering access to ‘unique experiences and benefits’
Dubai’s new crypto regulatory authority has acquired a piece of land in The Sandbox where it will establish virtual headquarters, making it the first regulatory agency to have facilities in the Metaverse.
Polkadot launches a new communications protocol that presumably will help battle bridge hacks.
For luxury fashion junkies, Gucci will begin accepting crypto payments at some U.S. stores:
Banter’s take
Short term, this is what we like to see: a daily engulfing candle on the Bitcoin chart, the break of a short term downtrend stemming from the $48k region, and some decent volume to boot. On the flipside, this kind of response is by no means a surprise given the information received: the markets were sure of a 50 basis points rate hike, but the possibility of 75 basis points further down the line loomed large. The fact that this is off the table for now, and the slightly more dovish tone from Powell spells good news: however, we need to wait for the CPI inflation data next week to get a clearer grasp of whether this will change or not.
