Last night, the Bank of Canada will announce its interest rate decision, and it is expected to announce a 25 basis point rate cut (with an 80% probability), firing the first shot of interest rate cuts by major central banks around the world. One day later, the European Central Bank will announce its interest rate decision, with a 95% probability of a rate cut.
In the past, other central banks followed the Fed in cutting interest rates, but now the situation is completely reversed, and the Fed has not even determined the timing of the first rate cut. However, this moment will surely come sooner or later, and the crypto market will usher in a real bull market.
The Fed’s rate cut scenario:
1. Time nodes
There are two important time points for interest rate cut expectations: the Fed interest rate meetings on September 18 and November 7.
The US election date is November 5, voting day. Unofficial results will be announced that night or the next day, and official results will be announced at the end of the year.
2. Interest rate cut data
According to CME data on that day, on September 18, 30.6% of banks would not cut interest rates, 57.2% would cut interest rates by 2.5 basis points, and 12% would cut interest rates by 5 basis points. The overall expected probability of a rate cut is 69.4%.
On November 7, the probability of no rate cut is 17.8%, a 2.5 basis point cut is 46.5%, a 5 basis point cut is 30.6%, and a 7.5 basis point cut is 5%. The overall expected rate cut probability is 82.4%.
3. Rate cut simulation
Taking into account the situation of the US election, the election will be held two days before the interest rate cut in November. If the interest rate cut starts in November and the good news comes true, the financial market will crash during the election, causing market fluctuations and affecting the election results.
If interest rate cuts begin in September, there will still be two months until the November election. Even if the U.S. stock market crashes and corrects, there will be enough time to digest the short-term bubble and ensure the stock market’s stable performance during the election.
4 Conclusion
Based on the above, the probability of a rate cut starting in September is the highest.
If this inference is correct, then in the three months from June to August, the financial market will have the potential benefit of interest rate cut expectations, which will be good for the U.S. stock market and the crypto market.
Bitcoin is forming a major upward trend. After May, the crypto market will continue to rise, but it will be slightly weaker in the third quarter.
The Bitcoin ecosystem is on the rise. The more Bitcoin rises, the greater the opportunities for the entire ecosystem will be. As institutions push up the price of Bitcoin, retail investors who cannot afford Bitcoin will consider the ecosystem, which will further boost the related ecosystem.
When does the blooming copycat season begin?
Based on the large-cycle analysis of the trends of BTC, BTC-D and ETH/BTC, we can find the following in the comparative trend chart from 2019 to 2022:
1. In 2020, BTC started the third wave of the main rise two months after the halving;
2. Bitcoin market share (BTC-D) peaked in December 2020, seven months after the halving, and then began to decline;
3. ETH/BTC also hit bottom in December 2020, and as the king of altcoins, ETH began to gain momentum;
4. In this round of bull market, the trend is faster than that in 2021, so it is speculated that BTC-D is expected to peak in October, six months after the halving, and the range is predicted to be 57%-60%.
5. Ethereum ETF is expected to be launched in July, and the bottoming time of ETH/BTC is expected to be advanced, but if we want to achieve great results, we still have to wait until after October.
Why do altcoins only explode in the middle and late stages of a bull market?
1. The project owners of altcoins have little money. From the entire bear market to the early bull market, they have to pay salaries and expenses every month, so they can only sell coins every month;
2. In the middle and late stages of the bull market, when the big whales have made enough money on BTC, some hot money will come to fight for altcoins, creating a bubble altcoin season, which is both a carnival and a wave of harvest.
Many people say that there is no copycat season, but in fact, they disagree. Very few products can be sold by dumping the market. Only crazy price increase during the copycat season is the best way for each project to sell products.
How to deal with it?
1. It is expected that BTC will complete the third wave, and the allocation will be 30% BTC, 40% ETH/SOL/BNB, and 30% popular altcoins;
2. At the end of December, BTC is expected to enter the top range, with 30% USDT arbitrage, 30% ETH/SOL/BNB, and 40% popular altcoins;
3. By the end of March 25, it is expected that the altcoin season will end, with 90% USDT and 10% popular altcoins;
4. Starting from April 25, we will gradually clear our inventory.
The above is merely an expectation of the market and should not be regarded as an actual transaction. The market is unknown, but we can make a rough prediction, so the actual market conditions in the future will be the main focus.
Three major events that impacted the market this month
1: The US non-farm payrolls report (June 7) is below 185K and CPI is also declining. In this case, our sector is bullish.
2. U.S. core consumer price index (CPI) annual rate (June 12)
The official has not yet given a specific forecast, but the market expects that the year-on-year increase in the overall CPI in May will be between 3.1% and 3.5%. Compared with 3.4% in April, this market forecast is also a piece of shit. It may be lower than the monthly value and may be higher than the April value. It is not worth learning from.
3: The focus of the Federal Reserve FOMC meeting (June 13) is the dot plot, which can further reveal the Federal Reserve’s expectations for the direction of interest rates in 2024 and 2025.
I always believe that our market is the future, and I always believe that interest rate cuts will come, and we don't need to wait for one or two years to come. Because, do you think it is realistic for the high interest rates of 5.25% to 5.50% to be maintained for one or two years? It is destined to be a rate cut.
Therefore, it is very important to always keep yourself on the train. Because in the bull market, it is impossible to accurately predict when a big bull market or a crazy bull market will break out. It is very important to keep yourself on the train.
To ensure that you are always on the right track, you need to stay away from contracts and only play with spot goods. If you play with spot goods, even if you touch a copycat, as long as it doesn't die immediately, you will be surprised when you wait until the big bull market.