Post #3791

The #Crypto markets continue to drop, why? This week was filled with macroeconomic data, which all turned out to be bad. However, the Dollar continued its strength the previous week, while Gold was strong too. #Bitcoin’s price action was terrible, through which altcoins have been suffering a lot. What has been happening in the past week as a reason for the current price action? CPI Data on Wednesday CPI Data came out last Wednesday where the measurements for the Consumer Price Index are measured, primarily influencing the FED to decide their interest rates and, whether or not, a potential rate cut is on the horizon. The data was in favor of risk-on assets as the data was lower than expected. Why does that favor the markets and what was the actual news? CPI Regular came out at 3.3%, while 3.4% was expected. Core CPI Regular scored 3.4%, while 3.5% was expected. The monthly data was positive as well, as the data was 0.0% vs. 0.1% and 0.2% vs 0.3%. All are positive for a potential rate cut or at least favor positivity towards the future on a potential rate cut. PPI data on Thursday The next important event was PPI data, which is technically the inflation data from Wednesday, but then from the producer’s perspective. The regular PPI provided a score of 2.2% instead of the 2.5% expected. The Core PPI Y/Y provided a score of 2.3% instead of the 2.4% expected. The monthly data was very positive for risk-on assets as well, as this came at -0.2% vs 0.1% and 0.0% vs 0.3%. All, again, very favorable for upward momentum on the markets, but unfortunately, the markets are not picking up any momentum. Crypto assets have continued their downward trend. Consumer Sentiment on Friday The consumer sentiment came out on Friday and can be signaled as a sign of weakness and strength for the markets, which is technically a market leader. The markets have provided a ‘positive’ signal as the consumer sentiment came out lower than expected. The expectations are a rate between 0 and 100, through which the data came out at 65.6 while 72.1 was expected. All in all, it is not the best data for economic strength, and as a matter of fact, a bullish perspective for risk-on assets as you might argue that the markets are eager for rate cuts and that the markets are rotating from here, crypto-native markets. However, some events took place during the week which didn’t cause upward momentum. FOMC On Wednesday evening, Jerome Powell’s speech was the most hawkish speech he has been producing in a substantial amount of time. Weirdly enough, all data is shouting for a rate cut, as the CPI and PPI start to come in way lower than expected, and, slowly but surely, the economic data becomes worse as well. That calls for a potential upcoming recession and additionally, the debt on the U.S. government starts to increase so the amount of debt payments that they need to do is getting worse and worse. A rate cut is a must in the next period, especially in election years. However, Powell kept his stance provided a hawkish tone, and revised his amount of potential rate cuts for 2024 downwards. Not a great outlook for the markets. However, overall, the markets have been doing exactly what you want it to be doing. Why is that? The markets have been going down on the Treasury Bond Yields, the 2-years have dropped substantially to the lowest point in the past two months (4.694%). The highest point during May was 5.00%, around the actual low of the Bitcoin markets ($58,000). The 10-year Yield has even continued its fall to 4.211%, which is currently the lowest point since the beginning of April as well. You would say, if that’s happening, then it’s very likely that Bitcoin will start to do really well, as the markets are pricing in a higher chance of a potential rate cut. It’s not the case. The Dollar continued its strength, as it rallied to 105.75 points, with only a single reason for this strength: the rate cut in Europe.