As traditional markets around the world continue to drop and crypto continues its downtrend, a number of happenings this week could see the downtrend halt and bring relief for market participants, as Ran and Gareth discussed in today’s show.
- FOMC or FOMO?
- Could earning releases trigger the market?
- Apple and Tesla could bring relief
- Trade or wait
All eyes on Powell
The Federal Open Market Committee (FOMC) is responsible for the monetary policy of the United States by overseeing the open market operations of the country. This is why everyone is watching out for the outcomes of the FOMC meeting on Wednesday 26 January.
While most experts and market participants expect the Fed not to increase its tightening or add any hawkish bias, the committee could always throw a curveball.
As most technical indicators are at oversold levels, indicating we might be near the bottom, everyone is waiting to see if the Fed continues with its tapering. The outcomes of Wednesday’s meeting could shape the near future for both traditional and crypto markets.
Some expert traders and investors believe there is a possibility that the Fed may stop its tapering, which would be a macro bullish sign for the markets in the near future.
An important point to note here is that keeping the stock market high is not one of the Fed’s mandates. Its priorities are twofold – price stability (keeping inflation under control) and maximum sustainable employment.
Source: https://www.chicagofed.org/research/dual-mandate/dual-mandate
But since unemployment is directly related to the economy and the stock market, we suspect the Fed will keep the markets’ best interests in mind.
Upcoming earnings releases
Netflix’s recent earnings release showed how one announcement by a major company can drastically alter the entire US stock market, and in turn affect major markets worldwide.
Netflix shares dropped as expected, because of its lacklustre earnings report, and the market is still recovering from the associated sell-off. Six of the Top 20 S&P Index companies are reporting earnings later this week. What do we expect?
We could be in for a rough ride. The anticipated volatility in the traditional stock market will more than likely also affect the crypto market.
The similarities between the S&P index today and the same chart during the 2008 crisis are uncanny (and a bit unnerving). This has a lot of investors worried as traditional markets continue to tumble, dragging crypto markets along with them.
That said, strong earnings reports could positively affect the market, and experts like Gareth Soloway believe a bounce in the stock market will bring much needed relief to crypto.
Bitcoin, isolated no more
Crypto depends heavily on the macro structure of traditional global stock markets. Key data in crypto – like network and user growth fundamentals – are important, but they can not be viewed in isolation when considering the near future price movement of cryptocurrencies.
Could expiry expire the downtrend?
As the weekly and monthly closes approach (and options expire), all eyes are on derivatives as there have been multiple occasions of the market reacting badly in the past on these occasions.
Banter wisdom
The upcoming week promises to be as action-packed as they come with the FOMC meeting, plus earnings reports coming out left, right and centre. Along with that, the weekly and monthly candle closes have always been extremely volatile. In times like this, it is better to wait for all the action to unfold and then make a decision accordingly.
As the saying goes, sometimes not trading is the best trade. In times like this when so much is going to happen in such a short amount of time, the merits of patiently waiting easily outweigh trying to guess which direction the market is going to go. HODL your bluechip coins, swap your shitcoins for quality, and dollar cost average into better quality coins.
