Title: AICoin: The Fed's Interest Rate Announcement and Its Impact on the Market
Discoverer Business School
Daily interpretation of market news, research on data, and analysis of cryptocurrency trends.
1. Let's start by interpreting today's macro hot topic, the Fed's meeting:
At 2 am this morning, as expected by the market, the Fed announced as scheduled that it would keep interest rates unchanged, maintaining the federal funds rate target range at 5.25% to 5.5%. This is the eighth consecutive meeting since September last year that the Fed has maintained the status quo.
Fed Chairman Powell stated at a press conference after the interest rate meeting that policymakers are closer to cutting interest rates and, if conditions are met, the earliest possibility would be at the September meeting.
From the announcement of the decision to Powell's speech, gold and US stocks rose, the US dollar fell, and US Treasury yields declined. The cryptocurrency market experienced a general decline, with BTC reaching a low of $63,500 during the day, falling alongside the US dollar, which is rare. However, the US dollar has now rebounded and recovered most of its early losses, and it is possible that BTC will also rebound. As for the reasons for the simultaneous rise and fall of the two, we have discussed many times before that the recent fluctuation of BTC is negatively correlated with US stocks, meaning that BTC moves in the opposite direction to US stocks and gold, and in the same direction as the US dollar. However, this is a short-term trend, and in the medium to long term, as a cryptocurrency priced in US dollars, BTC is highly likely to be negatively correlated with the US dollar.
After the announcement, the "New Fed Communication Agency" stated that the Fed has paved the way for a rate cut in September, and for the first time in two years, it has treated employment and inflation targets more equally. This significant shift implies that inflation may no longer be an obstacle to rate cuts.
We believe that the Fed's announcement of maintaining interest rates and releasing a clear signal of a rate cut has had a significant and complex impact on the market. The Fed's eighth consecutive maintenance of interest rates shows the cautious attitude of policymakers in dealing with economic uncertainty. Powell's speech further strengthened the market's expectation of future rate cuts, especially against the backdrop of easing economic prospects and inflation pressures, making this expectation more clear.
The rise in gold and US stocks reflects the market's expectation of future loose monetary conditions, while the decline in the US dollar and Treasury yields reflects the immediate response of the market to the Fed's policy shift. The general decline in the cryptocurrency market, especially the simultaneous decline of BTC and the US dollar, may be influenced by the overall market sentiment and capital flows, indicating an increasing correlation between the cryptocurrency market and traditional financial markets.
The New Fed Communication Agency further strengthened the market's confidence in a rate cut in September, pointing out that the Fed has achieved a more balanced attitude towards employment and inflation targets, indicating that inflation is no longer the main obstacle to rate cuts. This shift is of great significance to the market, as it reduces the uncertainty of future policy paths and provides market participants with clearer expectations.
2. Let's take a look at the data on open positions in futures contracts:
The data shows that the total open position of BTC futures contracts on the entire network has dropped to $35.152 billion, with a 24-hour decrease of 2.07%.
Our business school's research team believes that the current total open position of BTC futures contracts on the entire network reflects a strong focus and expectation of investors on the price trend of BTC. However, the overall open position has decreased by 2.07% in the past 24 hours, indicating that the market is facing certain selling pressure and uncertainty.
Specifically at the exchange level, CME, as a representative of traditional financial markets, has the largest open position of BTC futures contracts at 143,300 BTC, with a 24-hour decrease of 4.32%. This may indicate that traditional financial investors have a more cautious attitude towards the BTC market, possibly influenced by macroeconomic and policy adjustments, such as the impact of this morning's Fed interest rate decision and Powell's speech. As for Binance, as a leader in the cryptocurrency market, although its open position of BTC futures contracts ranks second, it also shows a significant adjustment in position, possibly reflecting a change in market sentiment.
In terms of the impact on the future market, this data may indicate that the price of BTC will continue to face volatility in the short term. The significant drop in CME contracts may exacerbate market panic, leading to more investors choosing to close or reduce positions, further affecting the overall price trend of BTC.
3. After discussing the market hot topics, let's also take a look at the technical trends:
Continuing from the previous analysis, we mentioned the importance of focusing on the gains and losses of the upward trend line of BTC, and the high probability of breaking through. Since breaking through the $53,450 upward trend line as expected, it is expected to enter a medium-term adjustment phase. In terms of trading strategies, we maintain a focus on short positions at high levels, and consider buying on the low side when approaching support. Currently, the upper resistance references are around $65,550, $66,850, and the starting point of the second decline near $67,500; the lower support references are around the previous low of $63,460, $62,370, and the Fibonacci 61.8% retracement level near $59,800. Refer to these key technical positions for operation. If there are short-term trading opportunities, we will update in the community.
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Discoverer Business School
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