U.S. Fed raises interest rates three times next week, crypto markets will recalibrate prices

Inspired by the rebound in US technology stocks, coupled with the fact that internal deleveraging has temporarily come to an end, the crypto market has performed quite well this week, with Bitcoin rising from $20,000 to $23,000, an increase of about 15%, and Ethereum on ETH 2.0 tentatively scheduled After the theme of the upgrade date was even more surprising, the price soared to $1,500, a weekly increase of 40%, and the crypto market changed from pessimism to everyone’s optimistic.

As mentioned in last week’s report, the main reason for the market’s good performance this week is nothing more than speculative funds. After the release of the CPI report and before the official interest rate hike in the United States, the market uncertainty is at a relatively low level. At the party time, investors all know that the CPI is 9.1% and the Fed will raise interest rates by three yards. It is unlikely that there will be events more important than these two in the short term. Since the uncertainty disappears, the investment money chooses to jump into the market to speculate on the rebound, hoping It seems to be quite effective to make a wave of quick money, and both the U.S. stock market and the crypto market have seen good gains.

But to be honest, these people are not here to invest for a long time. They have a high probability of selling their assets for safety a few days before the rate hike. From past experience, the weekly increase in the bull market will not be so high in the past. It’s 5% to 8% gains for several consecutive weeks, but this week’s gains have been quite violent, as high as more than 15%, we think it is a typical bear market rebound and the outlook is difficult to sustain, because the rate hike date is just around the corner, if it is a short-term transaction , the risk of buying a bet at this time is quite large.

The current global trend of interest rate hikes has not changed. The European Central Bank raised interest rates two yards by 0.5% for the first time in 11 years on Thursday. The United States will raise interest rates three yards on July 27, and the current CPI annual increase is 9.1%, which is generally considered to be It has peaked, but it is still a big challenge to bring the annual pressure back to 2.0% in the long run. Given that the base period of the price index is already high, the subsequent price must depend on the decline in energy prices and the frozen prices of enterprises. These factors are basically unpredictable, but Funds are still rushing to buy assets, and there are signs of overheating in the short term.

What I want to emphasize here is that if the timeline is extended to the long-term, that is, the range of 3 to 5 years, we will say that the overall market value of the crypto market still has a lot of room for growth, but if it is a short-term perspective, the interest rate hike cycle will still be Less than half is calling for entering a bull market, and the speed is too fast. Investors are advised to adopt a more conservative operating strategy for the current market conditions.

Although the institutions that should sell have already sold off and the market is at a stable bottom, the inflow of funds in the medium and long term is still not improving. In addition, in the face of the next wave of U.S. interest rate hikes, investors should try to keep the buying cost as low as possible. , to avoid impulsively buying cryptocurrencies that are too expensive, and there is always an opportunity to wait patiently, because no one can predict how the market will react after the Fed actually raises interest rates, but we can make some speculations next.

A. On July 19, the theme of ETH 2.0 was fermented, and the ether rose by 12% in a single day
The price trend of Ethereum was very strong yesterday, and it was not affected by the weakening of the US stock market at all. It recovered 12% price increase in a single day, and its performance far exceeded that of Bitcoin. The reason is that the core developer of Ethereum, superphiz, proposed the ETH main network. The proposal that the POS upgrade was scheduled for September 19 inspired the community to imagine the official version of ETH 2.0 upgrade. Funds poured into ether and continued to push up its price. Ether rose from $1,300 to $1,500 in one go. The weekly increase has reached 40%.

However, the upgrade schedule on September 19 is only a “proposal”. The official upgrade date has not yet been decided. In addition, Vitalik also speculated that the upgrade may fall around September, but it cannot be ruled out that there will be a delay. Simply put, this It’s just a discussion, and it has not been officially finalized yet, but the market is very paid for this news. Compared with the successful POS upgrade of the first two testnets, investors obviously love this discussion post on the community.

On the contrary, we believe that ETH 2.0 will not be launched so quickly. The testnet has just been upgraded. The follow-up testing and launch planning are still in progress. July 26 is the time when investors can call for orders at will, because the rate of interest rate hike has been determined, and the inside of the encryption industry is already quite stable, so it is unlikely that the previous big mines will appear, but from our point of view, this kind of The gains are still a little too optimistic.

B. On July 20, Bitcoin broke through US$23,000, and the short position of up to US$600 million in 24 hours was forced to liquidate
As the price of ether soared 12% to $1,500 by hyping the ETH 2.0 theme, bitcoin also followed suit yesterday, with the highest price reaching $23,600. Investors with highly leveraged short positions suffered heavy losses, with $600 million of short positions being liquidated in just one day, of which $380 million came from ether trading.

On the other hand, the U.S. stock market also staged a big rebound yesterday, with many companies reporting good earnings, alleviating investors’ fears of recent inflation and interest rate hikes, and driving the U.S. stock market to rebound across the board. The market suddenly turned from pessimism to bullishness. , re-entering the rebound period, and investors also forgot about the major market adjustment brought about by the interest rate hike next week in a short period of time, which is also the reason for driving the cryptocurrency market higher.

We believe that the market is party time until July 26th before the actual rate hike. Although the market looks good, the market sentiment has always changed. This kind of skyrocketing and falling trend is very similar to the rebound trend in the bull market. The current interest rate hike environment remains unchanged. Under the premise that interest rates continue to rise and the CPI decline rate is unknown, we believe that both the US stock market and the crypto market have some signs of overheating.