Starting next month June, the FED will begin its Quantitative Tightening (QT) program to progressively reduce its balance sheet over the course of a couple of years at the rate of $95 billion every month
#1 | Global Market Overview – FED Rate Hikes Could Impact Crypto Market
Our new issue this week:
In closing the previous week, the Equity market has been down for 7 weeks in a row. This means now it only needs one more week to match the record only seen since 1923. At the same time, $BTC already broke its own all-time record of 8 down weeks in a row.
In Europe, ECB also signaled to end of the negative interest rates experiment. We observe the fixed mortgage rate climb up this month from 1% to 1.3% for a 25-year mortgage.
#2 | Cryptocurrency overview
On the crypto side, the exchange net position change also indicates the market has been selling in panic during this recent market crash. Which is similar to what was observed in May 2021. Only when the selling wave was over and $BTC moved out of the exchange in a consistent manner again that the market could finally find the bottom in July 2021.
The BTC/USD long positions on Bitfinex are intriguing to watch as it shows how professional traders do with their margin in different market environments. We can see they usually play contrarian moves. I.e buying when the market is panicking and selling when the market is greedy. E.g: building up a long position when the market crashes (for example in May-21 and Jan-22). And then unwind the position gradually once the market starts moving in its predicted direction.
#3 | OVERALL
Overall, we think that $BTC will likely move in a range while the macro market is finding the bottom. Any tactical short-term rally – due to a low liquidity environment, rebalancing period, short squeeze, or previously oversold conditions – will be short-lived, and should be treated as an opportunity to reduce existing exposure rather than building up a larger position for a sustainable uptrend.
Thank you for your attention!
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