Market Pulse: FED Meeting and How We're Playing It

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

---

Tomorrow, we have the FED Meeting, which we see as the major event of the week. On Monday we broke down what the market is expecting, alongside what we're expecting. We'd suggest reverting back to yesterday's "This Week's Setup" report for full details, but we've also provided a short, top-down summary of yesterday's report for those that don't want to go back and read the full report.

Here's the summary:

While a 25bps cut is priced in, the real driver will be Powell's tone and the FED's Dot Plot. Cryptonary expects dovish guidance (Powell and the Dot Plot showing more rate cuts at all Meetings this year, followed by 2-3 more cuts next year), supporting risk assets and Crypto. This may help BTC break out above $117k toward $120k.

We'll now dive into where the entire market currently stands going into the event, and how we're positioned for it.

How is the Current Market Positioned?

We'll cover this in an overview format, simplifying where the market currently stands.

What are we seeing in the market currently?

• BTC is down just 6% from all-time highs.
• Both ETH and SOL have had recent breakouts of major resistance levels ($4,000 and $220).
• ETH/BTC is consolidating at local highs.
• TOTAL3 has recently broken out of a major resistance, where it's now putting in a bullish retest of support.
• The Dollar Index breaking down to new local lows.
• Equity Indexes (S&P and Nasdaq) are breaking out to new all-time highs.
• The Russell 2000 Index coiling at local highs. A dovish FED would likely see the Russell breakout to new all-time highs also.
• Gold is continuing its breakout to the upside. We expect that BTC will have its next leg when Gold slows/consolidates.

When looking at the above, it's hard not to be bullish in the short and medium term, despite some of the market top callers we see on Twitter at the moment. Historically, when markets have moved into a new rate cutting cycle (the right type of cuts) this has been bullish for risk assets. If we then pair this with Gold breaking out like it has, Yields and the Dollar moving lower, and with Equity Indexes also breaking out to new highs, it's again hard to not be bullish on BTC and Crypto.

How We're Positioned for Wednesdays' FOMC:

We remain positioned in the Majors and select memes, although we have some cash on the sides (15-25% of total portfolio) in case of volatility around Wednesday's FOMC. In the below, we'll give dip buying zones for the majors, although we don't expect to see strong enough dips into these dip buying zones, but we want to be prepared just in case it should happen.

• BTC: $108k-$112k
• ETH: $3,970-$4,340
• SOL: $200-$210
• HYPE: $49.00-$52.00
• AURA: $0.098-$0.116

Cryptonary's Take:

Our base case is for the FED to cut by 25bps and for Powell and the FED's Dot Plot to signal more cuts at upcoming Meetings. We would expect risk assets to move up on this.

However, what could invalidate our bullish thesis would be if we saw a FED/Powell indicate that they don't expect to do as many rate cuts as what is currently being priced in. This would likely result in risk assets seeing a more material pull back, which could then result in a trickier next few months even if the market knows that there are a couple more cuts to come. The market wants to see a FED that's willing to cut rates to 3.00% over the next 12 months, rather than just a couple of cuts over the coming 1-2 quarters.

BTC:

Going into the FED Meeting, BTC is consolidating below the key horizontal resistance of $116,600. Should we continue to see a consolidation between $114,000 - $117,000, and we get a bullish FED/Powell, then we'd expect Crypto to move up after the Meeting.