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Crypto is safe, for now

Updated: Aug 5, 2024
Published: Dec 13, 2023
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Earlier today, we published a report on what to expect from Powell and the FED press conference: we now have an update.

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WOW! In the SEP (Summary of Economic Projections), we expected the FED to increase their rate cuts in their updated SEP released today by 1 rate cut (from 1 cut to 2 cuts).

Instead, the FED went from 1 to 3 - this is at least 75 bps of rate cuts next year. We and other economists also expected Powell to push back on the market pricing in rate cuts.

Powell didn't push back at all. In fact, he embraced them and said that the FED had "discussed when to cut rates at today's meeting".

Powell is clearly happy with how all of this is gone. However, there did seem to be an underlying tone that a recession may hit next year.

But that'll likely be quick in the markets, with the FED stopping quantitative tightening (QT) and beginning quantitative easing (QE) while they begin their rate cuts.

Result?

  • Bond Yields down (risk-on, bullish)
  • The Index's up (S&P and NDX)
  • Crypto will likely stay range-bound within a 15% range of its highs.
Essentially, Powell has given the green light here for risk assets to continue higher. This is bullish for risk assets and good for crypto. One thing to consider is that crypto is up a lot over the past two months and has looked somewhat exhausted to the upside, especially BTC.

Remember, Bitfinex's whales market dumped BTC at $44k last week. This is always worth noting.

Anyhow, crypto is likely to stay high here. We don't think we massively move past the local highs, maybe $48k or so for BTC.

But, we see more consolidation over the coming month or two, with a pullback at some point to a $38k BTC.

Remember, we're still about five months out from a halving. Lots can still happen between now and then.

All is good liquidity/FED speak and macro-wise for the next month or so.

Let's go!

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