This week is the last super central bank week of the year, with a focus on interest rate decisions from the U.S. and Japan. The U.S. announcement will be at 3 AM Thursday. After last week's CPI data met expectations, this rate cut of 25 basis points seems to be a certainty, with CME indicating a 97% probability. This level means that the current U.S. stock and cryptocurrency markets have fully priced in this rate cut, so it won't be considered a benefit anymore. The main point of interest on Thursday will be Powell's speech and the outlook for the January FOMC. Currently, CME gives an 80% probability that rates will remain unchanged in January, which is key to market speculation for the rest of this month. On the same day, Japan will also adjust its interest rates: according to information from Japan, it's highly likely that there won't be a rate hike in December, which is some comfort for the market. If Japan still chooses to raise rates in December, while it wouldn't hurt much, it would be quite insulting. Coupled with the Fed's DeBuff, the market might not look good. However, the Fed's approach is not entirely unresolvable. If Powell emphasizes that not cutting rates is due to a strong U.S. economy, it might not be a bad thing, as it at least indicates there is no trading recession. If the short-term market digests the expectation of no rate cut, a price increase will still be quite easy, as the overall trend remains positive. In yesterday's article, I mentioned that I lean towards breaking new highs after a correction, and indeed we first saw a dip followed by a surge. This market seems to be geared towards shaking out weak hands; as I always say, markets change rapidly, and we must adapt accordingly!
Reasons for Bitcoin's Surge? From the perspective of macroeconomic and market factors:
Monetary Easing and Safe-Haven Demand: Central banks around the world adopt quantitative easing policies during economic downturns, increasing the money supply and intensifying the risk of currency depreciation. Investors, seeking to hedge against inflation and currency depreciation, turn to Bitcoin, increasing the demand for it.
Institutional Investors Entering the Market: The approval of Bitcoin spot ETFs injects new vitality into the market, attracting significant funds from mainstream and institutional investors, such as BlackRock and Grayscale, heavily betting on Bitcoin assets, thus enhancing Bitcoin's acceptability in traditional financial markets and increasing market demand.
Market Expectations and Speculative Sentiment: Events such as Bitcoin halving typically drive price increases before and after, leading to market expectations that attract investors to position themselves early. Additionally, the 'fear of missing out' (FOMO) speculative sentiment also drives buying activity, as investors worry about missing the opportunity of Bitcoin price increases.
Factors Related to Technological and Application Development:
Development of Blockchain Technology: The implementation of blockchain technology continues to expand application scenarios, with new business forms such as blockchain gaming and crypto collectibles emerging, enhancing the importance of Bitcoin as a 'general equivalent' of digital assets and stimulating investor enthusiasm.
Expansion of Payment Methods: Some mainstream payment platforms and financial institutions have begun to accept Bitcoin as a payment method or provide related transaction services. For example, in October 2020, PayPal in the U.S. announced that it would allow its platform merchants to choose Bitcoin as one of the payment methods, increasing the usage scenarios and demand for Bitcoin.
