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Bitcoin Price Could Skyrocket Like In March If This Happens: Expert

In a recent post on X (formerly Twitter), Ram Ahluwalia, the CEO of Lumida Wealth, weighed in on the potential market impacts on Bitcoin, particularly highlighting the significance of a failed Treasury auction. Lumida Wealth, recognized as an SEC registered investment advisor, is known for its specialization in alternative investments and digital assets.

Ahluwalia’s tweet emphasized the need to monitor Bitcoin’s response to specific macroeconomic events. He stated, “The test for Bitcoin as a macro asset will be ‘What happens if there is a failed Treasury auction?’ This year, Bitcoin rallied during (1) the March bank failures and (2) as Treasury rates have rattled markets. Here is the third test …”

Will Bitcoin See Another 50%+ Rally?

To recall, Bitcoin’s price shot up by over 55% in the aftermath of the US banking crisis earlier this year. On March 10, 2023, the Silicon Valley Bank’s unprecedented collapse, attributed to a bank run coupled with a capital crisis, became a focal point of the broader 2023 United States banking crisis. This saw a domino effect with multiple small to mid-sized US banks falling within a span of five days. While the global banking sector stocks plummeted, Bitcoin experienced a substantial surge in its value.

More recently, Bitcoin is rallying even as treasury rates continue to unsettle global markets. With the 10-year US Treasury yield crossing the 5% mark for the first time in 16 years, there are indications of rising interest rates on government bonds. Typically, such yield increments may push investors to reconfigure their portfolios away from risk assets, adding to market volatility. However, akin to gold, Bitcoin has recently been acting as a safe-haven asset in turbulent times.

Diving deeper into the topic, Ahluwalia elucidated, “The Bitcoin rally, in part, is due to concerns that the Federal Reserve may need to intervene with Yield Curve Control or QE. […] Fidelity makes the case that the Fed may need to engage in Japanese style Yield Curve Control. If so, that would be strongly bullish for real estate, stocks, Bitcoin, bonds, REITs, TIPS and real assets more generally. It would also be bearish for the USD. The US has hard choices ahead.” He further emphasized the importance of structuring portfolios to withstand potential economic shocks and underscored the importance of commodities in weathering inflationary pressures.

Ahluwalia shared his perspective on the current state of the Federal Reserve and the Treasury markets, pointing to recent Treasury auctions that displayed softer bid-to-cover ratios. “There is a legitimate argument that the Fed may need to intervene in Treasury markets. The recent Treasury auctions have weaker bid-to-cover ratios. Japan and American households are the marginal buyer…and they’ve been rewarded with losses,” Ahluwalia remarked.

Post-pandemic debt dynamics

Three Peat For BTC As Safe-Haven

He added that the Fed’s balance sheet “is already upside down […] it has the equivalent of negative equity (called a Deferred Asset) – an accounting treatment that is not permitted for private companies… The Federal Reserve…has $1.5 trillion mark-to-market losses because it bought Treasuries & MBS. For the first time in 107 years, this bank has negative net interest margin. Its losses are poised to exceed its capital base.”

Ahluwalia explained that a treasury auction is deemed unsuccessful when the US Department of the Treasury initiates its regular auctioning of government securities, such as Treasury bills, notes, or bonds, but fails to attract adequate bids to cover the entirety of the securities on offer. Essentially, this signals a lack of investor interest in acquiring the government’s debt tools at the predetermined interest rates or yields.

On Bitcoin’s intrinsic value, Ahluwalia noted, “My view on Bitcoin is that it is a ‘hedge against negative real rates’. That’s CFA talk for what Bitcoiners refer to colloquially as ‘money printer go brrr’.” He also stressed the potential repercussions on risk assets if long-end rates were to see a significant spike.

“If long-end rates do blow out, that would hurt risk assets like long-duration Treasuries. The higher discount rate would cause a re-rating in stocks – much like we saw in 2022 and the last two months. However, If Bitcoin can rally during a ‘yield curve dislocation scenario that would give Bitcoin a ‘three peat’. Bitcoin would then find a welcome home on a greater number of institutional balance sheets,” Ahluwalia concluded his bullish thesis for Bitcoin.

At press time, BTC traded at $34,145.

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Bitcoin And Crypto Poised To Skyrocket As Endgame Of US Policy Nears: Analyst

The intricacies of US monetary policy have been placed under the microscope by Jordi Alexander, CIO of Selini Capital, who today offered an incisive analysis of the potential ripple effects these policies may have on the Bitcoin and crypto market. Drawing correlations between traditional financial mechanisms and the nascent digital asset landscape, his commentary elucidates a series of complex market dynamics that every investor should be aware of.

At the crux of Alexander’s argument is his observation that the Federal Reserve’s approach to handling current economic conditions might be nearing an inflection point. As reported by NewsBTC, there are growing concerns in the bond market. Bonds with maturities exceeding 10 years have seen a decline of 46% from their highest value in March 2020. Moreover, the 30-year bonds have fared even more poorly, with a drop of 53%.

Alexander remarked, “Haven’t expressed macro views in a while – but as things are about to really start moving – its time. I spent months analyzing the endgame of US policy. The outcome I saw is now coming into view. Gradually at first.. then all at once, the Fed will poo-poo in their pampers. ”

Why QE Might Be Back Sooner Than Later

The analyst perceives the recent shifts in the bond market, especially concerning long-term bonds, as a precursor to potential policy changes. To back this up, Alexander is referencing Nick Timiraos of the Wall Street Journal who recently highlighted a specific sentiment from the Dallas Fed President Lorie Logan that is indicative of this shift.

Logan has begun to express reservations about the earlier hawkish stance of the Federal Open Market Committee (FOMC), largely due to the recent surges in Treasury yields and term premiums. Her concerns emphasize the tug-of-war between the need for restrictive financial conditions to bring inflation down and the current strength of the labor market and overall economic output.

Remarkably, Logan believes that the reasons for the tightening of financial conditions, especially those connected with the recent surges in Treasury yields and term premiums, might reduce the necessity to raise the fed funds rate.

Commenting on this U-turn by the Fed’s Logan, Alexander argues, “This is the Bat-Signal I have been waiting for. What does it mean? Why is the Dallas Fed president in the top tweet doing a big baby U-turn? Because they are starting to realize they are losing control of the bond market!”

Expanding on the nuances of the bond market, Alexander emphasized the distinction between the front and back ends of the curve. He stated, “The front of the curve, such as T-bills & 2-year bonds, are generally very responsive to rate guidance by the Fed… But the Fed never has as good control over the back end- especially 30-year bonds.” Alexander’s analysis points towards a decelerating demand for these long-term bonds, suggesting a potential loss of market control by the Federal Reserve.

This evolving bond market scenario places the Federal Reserve in a precarious situation. Alexander, elaborating on this potential dilemma, posits, “What if they agree to stop raising rates or even initiate cuts, but bond buyers still don’t show up?” He further speculated on a possible shift – the endgame – in the Federal Reserve’s approach: “Placed between a rock and a hard place, the Fed might be pushed towards Yield Curve Control,” hinting at a reversion to Quantitative Easing (QE) policies.

Drawing a parallel to the Japanese financial scenario, Alexander prophesied, “The USD could very well be the casualty of this policy direction, much like the Yen’s predicament in Japan.” He then connected these macroeconomic shifts to the digital asset space, forecasting, “Goodbye Quantitative Tightening, hello my old friend Mr. QE. The timeline is uncertain, but it is time to start paying attention to term premium, like the Dallas Fed!”

Bitcoin And Crypto Could Profit Massively

Ultimately, QE is something that Bitcoin and cryptocurrencies have benefited tremendously from in the last bull market. Alexander therefore also predicts “yes your internet coins [aka Bitcoin and crypto] could then benefit”. Remarkably, this view is shared by several analysts.

BitMEX founder Arthur Hayes recently expressed a similar view, according to which the Fed will sooner than later find itself in a bind to reintroduce QE. Hayes predicts a Bitcoin price of $750,000 in 2026.

But this perspective isn’t universally accepted. Yuga.eth from Coinbase drew on Austan Goolsbee’s confidence in the FOMC’s commitment to tackling inflation. To this, Alexander sharply responded, “Nothing about increasing the debt is helping the inflation anyway. As I wrote at the very beginning, the only way to do it properly would be to increase taxes, especially corporate.”

At press time, Bitcoin traded at $26,677.

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Is Bitcoin’s Bottom In Sight? Expert Analysis Says Yes

Bitcoin prices could be bottoming, looking at price charts, and this might be one more opportunity for the savvy to accumulate before prices rip higher, according to one optimistic analyst. Taking to X, the analyst, Cryptocon_, said the “Ultimate Oscillator” indicator suggests that Bitcoin is at a “cyclical bottom,” adding that for the “first time,” the indicator has crossed into the cycle bottom zone in the two-week time frame.

Bitcoin Likely Bottoming: Here’s Why

Whether this prognosis is accurate depends on how Bitcoin prices pan out in the next few trading sessions. However, Bitcoin prices have since added roughly 4% since Cryptocon_ first laid out the analysis.

Bitcoin is changing hands at around $28,000, up 12% from September lows. Following the sharp expansion on October 1 lifted BTC above September 2023 highs, a strong start for Q4 2023.

Bitcoin cyclical bottom| Source: Cryptocon_ on X

The Ultimate Oscillator is a momentum indicator built on moving averages. Technically, the indicator is based on the idea that prices tend to close near the highs or lows of the recent trading range.

Accordingly, based on Cryptocon_, Bitcoin is presently at “cyclical bottoms,” the same zone where BTC found support in the tail end of 2022 before bouncing off strongly in Q1 2023.

If historical performance guides, Cryptocon_ believes “Bitcoin is offering traders one last accumulation opportunity,” but “most people will squander the pullback predicting and worrying about the macro.” Current macroeconomic conditions favor another round of interest rate hikes, especially in the United States. Although the Federal Reserve (Fed) kept rates unchanged in the last session, there are concerns that another hawkish environment could crash the crypto market like it did in 2022.

Is BTC Heading Back To $32,000?

At press time, Bitcoin is trading above August 29 highs in what appears to be a continuation of the bull run set in motion in late August. Still, it is unclear whether Bitcoin bulls have the momentum to push on. 

The daily trading chart shows that the coin is still trending inside the bear candlestick of August 17. The bar was wide-ranging with high trading volumes, cementing the bearish preview that continues to hold from the volume analysis perspective. 

BTC price on October 2| Source: BTCUSDT on Binance, TradingView

Despite buyers expecting more gains in the sessions ahead, there must be a solid close above August 17 with rising trading volumes, completely reversing losses of mid-August. This move will likely cancel out the bearish preview that, as aforementioned, holds. This might set the ball rolling for a leg up to $30,000 and $32,000 in the sessions ahead.

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Bitcoin And Crypto Face Turbulence As 10-Year US Treasury Yield Hits 15-Year High

In an environment of soaring interest rates and economic unpredictability, Bitcoin and the broader crypto market face increased headwinds. The shift in the financial landscape was recently underscored by the Benchmark 10-year US Treasury yield, which hit a 16-year high this Thursday.

Longest Yield Curve Inversion Ever

Historically, an inverted yield curve, where short-term yields are higher than long-term ones, has been a harbinger of economic downturns. Notably, the 10-Year minus the 3-Month Treasury Yield curve has been inverted for a record 217 trading days. Past data indicates that the longer the delay between the inversion and the start of a recession, the more severe the recession is likely to be.

Joe Consorti, Market Analyst at The Bitcoin Layer, underscored this concern, remarking on Twitter: “The yield curve is re-steepening at breakneck speed. Up by 10 bps or more today across the curve. Do you know what happens when the yield curve steepens, every single time? Hint: not economic expansion.”

The Fed’s recent signals and policy stance have taken the financial world by storm. Charlie Bilello, Chief Market Strategist at Creative Planning, noted, “The 10-Year Treasury Yield moved up to 4.49% today, highest since October 2007. The Real 10-Year Yield (adjusted for expected inflation) of 2.11% is now at the highest level since March 2009.” Bilello also pointed out the significant reduction in the Fed’s balance sheet, which is currently “over 10% below its April 2022 peak.”

The two largest drawdowns over the last 20 years were between December 2008 and February 2009 with 18.2% (balance sheet hit a new high in Jan 2010), and from January 2015 to August 2019 with -16.7% (balance sheet hit a new high in March 2020).

The rise in the 10-Year Treasury Yield was reiterated by the analysts from “The Kobeissi Letter,” who stated: “BREAKING: 10-Year Note Yield officially hits our 4.50% target… The 10-Year Note Yield is up an incredible 20 basis points in less than 24 hours… With supply side inflation out of control and oil prices back to $90+, the Fed has no choice. Higher for longer is back.”

The Federal Reserve’s Stand

During Wednesday’s FOMC meeting, the US central bank and chairman Jerome Powell have made clear its intentions, signaling the potential for an additional rate hike this year and forecasting fewer cuts next year. It now forecasts half a percentage point of rate cuts in 2024. Prior, the dot plot showed cut rates by a full percentage point next year.

This “higher for longer” strategy seems to diverge from the market’s prior expectations, despite three months of seemingly positive inflation data. Moreover, Powell conveyed confidence in the US. economy, emphasizing the need to ensure interest rates are adjusted correctly to achieve the central bank’s 2% inflation target.

However, the market remains uncertain, with the CME Group’s FedWatch Tool indicating only a 32% chance of another rate hike in November and a 45% likelihood by December.

Implications For Bitcoin And Crypto

Risk assets, including Bitcoin and other cryptocurrencies, have historically been sensitive to increases in the 10-Year Treasury Yield. Charles Edwards, founder of Capriole Investments, highlighted the challenges for the Bitcoin and crypto sector:

The Fed wants more unemployment. The job market is still too strong. They’ve raised the expected 2024 rates as a result and the 10YR has broken out to new decade highs. As long as the 10YR is breaking upwards like this, risk assets are going to see further headwinds.

Historically, rising yields are indicative of an expectation of higher interest rates, which increase the cost of borrowing. This scenario often leads to a reduction in speculative investments, with investors favoring more stable, yield-bearing assets over riskier options such as Bitcoin and crypto.

Another problem for the market is the “higher for longer” approach and the massive reduction of the Fed’s balance sheet. Risk assets like Bitcoin are traditionally a “sponge” for high liquidity, but when this dries up in the financial market, they usually suffer the most.

In addition, concerns about a possible recession will continue to rise due to the inverted yield curve. Remarkably, Bitcoin and crypto have never traded in a recession, the reaction is uncertain.

At press time, Bitcoin traded at $26,655.

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Decoding The Fed: The Future Of Bitcoin And Crypto Post-Tightening

As the market braces itself for the Federal Reserve’s imminent announcement regarding its monetary policy, speculations are rife about the potential impact on Bitcoin and crypto. Based on Grayscale’s recent analysis by Zach Pandl, today’s announcement could be the critical juncture the Bitcoin and crypto community has been awaiting.

In the aftermath of the COVID-19 crisis in 2020, the Federal Reserve embarked on a path of significant monetary easing to reignite the US economy. Their initial stance was one of unwavering support: “The Federal Reserve committed to overstimulating the US economy–with hopes to avoid the sluggish recovery that followed the 2008-2009 financial crisis.” This decision saw a bolstered Bitcoin and other cryptocurrencies in 2020.

However, as Pandl points out, the tide seemed to turn in mid-2021 when the Federal Reserve had a revelation: “[The Fed] seemed to realize it was overdoing it.” What followed was a series of the most “largest and steepest funds rate increases in modern history.” As real interest rates rebounded, Bitcoin’s valuation, which had soared during the period of monetary easing, began to see a massive downturn.

The Road Ahead For Bitcoin And Crypto

Pandl’s analysis elucidates the heightened anticipation around the FOMC’s meeting. He notes, “We believe the FOMC is likely to keep rates on hold at tomorrow’s meeting.” Notably, this is in line with broader market expectations. According to the FedWatch tool, 99% expect a pause by the Fed.

Despite hints earlier in June 2023 about potential rate increments beyond the 5.25-5.50% range, the current economic indicators, such as “benign inflation data” and steady “oil prices,” could influence the committee’s decision, argues Pandl.

Yet, as the report astutely mentions, it’s not just about the immediate policy decision: “For crypto, whether the Fed hikes one more time or not may be less important than the fact that the broader tightening cycle is coming to an end.” This perspective, when viewed in light of historical data, suggests a potential upliftment for digital assets. After all, “After the funds rate peaked in the last five tightening cycles, real interest rates declined and equity market performance generally improved.”

Although the crypto ecosystem continues to evolve at a rapid pace with “new applications, enhancements to existing protocols, and wider adoption,” its valuations haven’t always mirrored these advancements. Over the last few years, as Pandl underscores, “valuations have been heavily influenced by the macroeconomics backdrop and swings in Fed monetary policy–from ultra-easy policy in 2020 to steep rate increases more recently.”

The potential conclusion of the Fed’s rate increases could signify a pivotal moment for Bitcoin and other digital assets. As we approach this juncture, the crypto market may find itself at a crossroads where “A possible end of the tightening process could remove a headwind to crypto valuations, and allow prices to more closely track the industry’s improving fundamentals.”

At press time, BTC traded at $27,099.

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How Bitcoin And Crypto Are Impacted By The Fed’s Growing War Chest: Report

In a recent report by Capriole Investments’ Charles Edwards explored the Federal Reserve’s ever-expanding war chest and its potential implications for the Bitcoin and crypto market. As Bitcoin gears up for its halving in April 2024, a pivotal event that will make it scarcer than gold, understanding the macroeconomic environment becomes crucial.

Why Macro Matters For Bitcoin And Crypto

Edwards underscores the inherent interconnectedness of global markets, asserting, “Bigger markets drive smaller markets.” This symbiotic relationship is evident in the crypto realm, where altcoins’ performance is closely tethered to Bitcoin’s movements. Drawing a parallel with traditional markets, Edwards elucidates, “Bonds drive equities, equities drive Bitcoin and Bitcoin drives altcoins.”

Contrary to the prevailing sentiment of an impending recession in 2023, the equities market defied expectations with a robust rally. This surge was not arbitrary but was propelled by the groundbreaking integration of usable AI, which has the potential to significantly augment GDP. Edwards directs attention to the NAAIM Exposure Index, a barometer of NAAIM managers’ equities exposure. The current readings of this index are reminiscent of those in June and October 2022, both of which signaled local bottoms for the S&P 500.

Furthermore, the AAII sentiment survey results, which are currently moderate, could provide a more convincing buy signal if they align with the NAAIM Exposure Index. Another metric that Edwards holds in high regard is the Put/Call ratio. This ratio offers insights into the relative bullishness or bearishness of market participants in the options market. A recent spike in this ratio suggests that the traditional finance market might be on the cusp of a near-term upward movement, Bitcoin and crypto could follow.

However, Edwards tempers this optimism with a note of caution. For a more definitive bullish signal, the S&P 500 would need to breach and sustain above the pivotal monthly resistance level at 4600. A consistent performance above this threshold would dispel any notions of a transient “dead-cat-bounce.”

Macro Fundamentals: A Mixed Bag

The broader macroeconomic picture presents a mosaic of varying hues. The aggressive tightening cycle, a hallmark of the Fed’s recent monetary policy, is still being assimilated by the markets. With the reservoir of household savings accumulated during the Corona stimulus years now running dry, a consequential contraction in consumer spending is on the horizon.

Edwards shines a spotlight on a couple of particularly disconcerting metrics: a marked decline in manufacturing, a sector whose downturns have historically been harbingers of recessions and consumer spending, which has not only dipped below its 20-year average growth rate but has done so at an alarming velocity.

Other red flags in the US economic landscape include a relative rise in the cost of living as income growth, at a meager 1% annually, lags behind inflation; an unprecedented credit card debt mountain of $1 trillion; escalating delinquency rates; and a squeeze on net worth as housing prices wane in the face of dwindling demand.
Yet, despite these ominous signs, the robust employment rates render any immediate proclamations of a recession premature. Edwards emphasizes the significance of the “initial claims” metric as a bellwether for unemployment trends.

However, the integration of AI into the workforce is not just a technological marvel but a potential economic game-changer. Edwards, drawing from personal experience, notes a 50% surge in productivity with AI’s aid. He references a statement by Sam Altman, CEO of OpenAI, which projects that in the near future, a single programmer, with tools like ChatGPT and Copilot, could rival the productivity of 20-30 of today’s programmers.

The Fed’s War Chest

Aware of the looming economic uncertainties, the Federal Reserve has been bolstering its defenses. The unprecedented rate hikes, catapulting interest rates from zero to 5% in a mere year, coupled with a contraction in the money supply rate, have engendered the most stringent economic conditions ever recorded that has been weighing heavy on tradfi, Bitcoin and crypto.

The Fed’s dual strategy of high interest rates, which provide leeway to slash rates during crises, and its recent success in paring down its balance sheet by a whopping $1trillion, are central to its defensive posture. Edwards speculates on the timing of the next QE round, suggesting that given the impending election year, the Fed might be compelled to deploy its liquidity arsenal sooner than anticipated.

Given the current macroeconomic tableau and the 90% of rate hikes already factored into the market as per the CME FedWatch, Edwards posits that the Fed might be compelled to infuse liquidity in the imminent future, especially if indicators like rising unemployment or plummeting consumer spending manifest. What will happen then should be clear to everyone: risk assets like Bitcoin and crypto will rally, aligning perfectly with the BTC halving.

At press time, BTC traded at $26,015.

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Bitcoin And Cryptos Poised For Final Surge Before US Recession, Here’s Why

In the intricate dance of global finance, traditional economic indicators and the burgeoning Bitcoin and crypto market are becoming increasingly intertwined. Recent macroeconomic data from the US suggests a cooling economy, and this could have profound implications for Bitcoin and other cryptocurrencies.

Macro Data Snapshot: A Cooling US Economy

Yesterday’s data release paint a clear picture of a slowing US economy:

  • Job Openings: The July JOLTS report indicated a significant drop in job openings, falling to 8.827 million from the previous 9.165 million, and notably below the expected 9.5 million.
  • US ADP Nonfarm Employment Change (August): Actual figures came in at 177K, missing the estimate of 195K and showing a sharp decline from the previous 324K.
  • US GDP (QoQ) (Q2): The actual growth rate was 2.1%, slightly below the estimated 2.4% and just above the previous 2.0%.
  • PCE Prices (Q2): The actual figure was 2.5%, marginally below the 2.6% estimate and a significant drop from the previous 4.1%.
  • Core PCE Prices (Q2): The actual data showed 3.7%, just below the 3.8% estimate and down from the previous 4.9%.
  • Real Consumer Spending (Q2): The actual figure was 1.7%, slightly above the 1.6% estimate and down from the previous 4.2%.
  • Pending Home Sales (July): The month-on-month data showed an increase of 0.9%, defying the -0.60% estimate.
  • Pending Home Sales Index (July): The index stood at 77.6, slightly above the previous 76.9.

Implications For Bitcoin And Crypto

The cooling US economy, as indicated by the recent macro data, might be setting the stage for a (last) significant surge in BTC and crypto prices before a recession. Why? Because bad news is good news for the currently short-sighted financial world. Bad data means that the US Federal Reserve will not raise interest rates further and that Quantitative Easing (QE) is getting closer. The long-term consequences in the form of a recession are being overlooked.

Joe Consorti, a renowned Bitcoin Layer analyst, highlighted the significant drop in job openings and the slowing job growth in August. He stated, “US job openings are at 8.827 million, the lowest level since September 2021. Worse yet – last month’s data was severely overestimated. Cracks are spreading in the labor market. Rate hikes’ impact finally hitting.”

He further emphasized the paradox of weak economic data driving stock market surges, suggesting, “Bad news is good news right now. Sour data relaxes investor fears of a hawkish Fed – igniting hopes of relaxed policy to support asset prices. I don’t make the rules.”

Michaël van de Poppe delved deeper into the relationship between traditional economic indicators and Bitcoin’s performance. According to him, the most likely case are no more rate hikes as the economic data is coming in terribly, through which Gold, Silver and Bitcoin will be running upwards.

He pointed out the inverse correlation between the Yields markets and Bitcoin, suggesting that as Yields show signs of peaking, Bitcoin could be poised for a surge. “The 2-Year Yields are even more apparent than the 10-Year Yields, indicating a potential top in the making, said van de Poppe.

He explained that the previous top in November of 2018 marked the low on Bitcoin. Afterwards BTC broke down, but the top of the Yields resulted into the bottom of the bear market for Bitcoin. The continuation of the selloff on the Yields resulted in more and more strength on the Bitcoin markets. Van de Poppe added:

The first real high in November of 2022 also marked the low of Bitcoin. And the previous time we started to have a substantial selloff on the markets for Yields (March ’23), the price of Bitcoin started to rally upwards significantly.

Macro analyst Mortensen Bach’s predictions for the next 6-10 months also suggests a potential downturn for the USD, a decrease in rates, and an uptick for both stocks and crypto. According to him, the expansion phase of financial markets is coming to an end. However, there’s one last leg up for markets.

While he believes that the soft landing narrative is nonsense, he warned of the repercussions of the Federal Reserve’s aggressive rate hikes, stating, “FED jacked up rates by 500bp in 12 months, in order to try and manipulate the economy to cool off. This was a big mistake and we will pay the price for it, likely in 2024.”

Crypto trader Daan emphasized the looming recession fears and the potential for rate cuts and increased money printing in the near future. He commented, “Recession fears will be all over the media soon. Bring on the Rate cuts & Money printing! (Not yet but doubt it takes much longer than ~6 months).”

At press time, BTC traded at $27,264.

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Bitcoin And Crypto Face Pressure: Impact Of Rising Real Yields

The intricate dance between Bitcoin, crypto and real yields is becoming increasingly pronounced. As the world of traditional finance grapples with the implications of shifting real yields, the BTC and crypto market is not immune to these fluctuations.

For the uninitiated, the ‘real yield’ refers to the yield on US treasuries, adjusted for inflation. This metric is pivotal in understanding the broader financial ecosystem, and its movements can have profound implications for risk assets, including Bitcoin and other cryptocurrencies.

Higher Real Yields = Bitcoin And Crypto Down

Renowned analyst @tedtalksmacro recently shed light on this intricate relationship, stating, “An important correlation – BTC + US real yields. Simply, higher real yields drive investors to cash and fixed-income… and out of ‘riskier’ assets like BTC and stocks.” This observation underscores the delicate balance that Bitcoin and other cryptocurrencies maintain with the broader financial market.

The path of real yields is determined by two primary factors: inflation and nominal rates. With the Federal Reserve’s hiking cycle nearing its end, nominal yields are potentially at their zenith. However, the trajectory of inflation remains uncertain, and as @tedtalksmacro notes, it will “likely be the greater mover of real yields.”

Adding another layer of complexity, the US treasury’s recent influx of longer-dated issuance is exerting upward pressure on nominal yields, especially on the back-end. The 10-year, for instance, is trading at highs not witnessed since 2008.

On the topic of inflation, expectations lean towards a decline in the coming months. As @tedtalksmacro astutely points out, “If you have been following along, [this would be] conducive to higher real yields. Higher real-yields are bearish for risk-assets.” This observation is particularly salient for the crypto community, as falling inflation, counterintuitively, might spell trouble for risk assets like Bitcoin.

The Federal Reserve’s aggressive rate hikes aim to curb inflation. Yet, the unintended consequence of this strategy, combined with sustained high rates, could be a rise in real yields. This makes fixed-income assets more appealing, potentially diverting investments away from riskier ventures like stocks and altcoins.

The crypto community awaits Jerome Powell’s address this Friday with bated breath. As @tedtalksmacro anticipates, Powell is likely to persist with the ‘higher for longer’ rhetoric, a stance the FOMC has maintained since late 2021. “Higher for longer + falling inflation + fresh duration issuance = higher real-yields = lower risk assets,” concludes @tedtalksmacro.

Will BTC And Crypto Fall Due To Jackson Hole?

Keith Alan, founder of Material Indicators, draws attention to historical patterns and potential market reactions to Jackson Hole. “Remember when FED Chair Powell spoke from Jackson Hole last year and his hawkish tone triggered a 29% BTC dump that took 5 months to recover? JPow returns to JHole this Friday and there are some similarities in the PA we are seeing now and the PA we saw leading up to last year’s speech.”

Alan highlights the technical patterns observed in Bitcoin’s price movements leading up to Powell’s previous speech and the current scenario. However, he cautions against drawing direct parallels, emphasizing the changed macroeconomic conditions and Powell’s evolved communication style.

“To be clear, the similarities in the current PA, relative to last year’s PA do not mean that price will react the same way this time,” Alan states. He underscores the need for investors to be vigilant, yet not reactive, to the potential market volatility surrounding the upcoming Jackson Hole event. “We must expect JPow’s words to move markets.”

At press time, BTC traded at $26,589.

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Goldman Foresees Q2 2024 Fed Rate Cut: A Boost For Bitcoin?

In a recent note that has caught the attention of both traditional financial markets and the Bitcoin community, Goldman Sachs economists, including the renowned Jan Hatzius and David Mericle, have made a significant prediction regarding the Federal Reserve’s monetary policy. The note suggests that the Federal Reserve may commence a series of interest rate cuts by the end of June 2024.

“The cuts in our forecast are driven by this desire to normalize the funds rate from a restrictive level once inflation is closer to target,” the Goldman economists wrote. This statement underscores the bank’s belief that the Federal Reserve’s current stance on interest rates may be too restrictive, especially if inflation rates continue to trend towards the central bank’s target.

The note further elaborates: “Normalization is not a particularly urgent motivation for cutting, and for that reason we also see a significant risk that the FOMC will instead hold steady.” This cautious tone suggests that while Goldman Sachs is predicting a rate cut, they also acknowledge the unpredictability of the Federal Reserve’s decisions.

The recent data, which showed US inflation rising at a slower-than-expected rate of 3.2%, with the core consumer price index at a 4.7% annual pace, further complicates the picture. With the Fed’s benchmark rate currently set between 5.25% to 5.5%, Goldman Sachs expects it to stabilize around 3 to 3.25%.

What Does This Mean For Bitcoin Price?

Expectations of a rate cut from Goldman Sachs are in line with market expectations according to the CME FedWatch Tool. In May 2024, 68% already expect there to be at least a 25 basis point (bps) rate cut.

CME FedWatch tool probabilities

However, it remains to be seen whether macro events will influence the Bitcoin price again. In the last few months, BTC increasingly decoupled from macro events while the stock market rallied towards all-time highs and stagnated around the $30,000 mark.

Interestingly, the timing could be very positive for the Bitcoin market. On the one hand, March 15, 2024 is the final deadline for spot Bitcoin ETF filings from BlackRock, Fidelity, Investco, VanEck, and WisdomTree; on the other hand, Bitcoin halving is coming up at the end of April (currently expected on April 26).

The high expectations for these two events, coupled with a dovish monetary policy from the Federal Reserve, could be a massive catalyst for the Bitcoin price.

At press time, BTC traded at $29,426 and saw another calm weekend amid the liquidity summer drought. Breaking above $29,550 is key to establish any bullish momentum to initiate another push towards $30,000.

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