First, let's analyze the macro data of the US market
The 10-year Treasury yield has risen a full percentage point since early August, in line with the rise it faced during the "taper tantrum" in mid-2013.
The 10-year U.S. Treasury yield has soared from a low of 3.25% in April to over 5%. The 30-year U.S. Treasury yield, which had fallen to 3.5% in April, also recently broke through the 5% mark.
The U.S. bond market is experiencing the worst "market sell-off" in 40 years. Of course, this bond market situation may cause the Federal Reserve to end its interest rate hike process. At least it is not difficult to see from the speeches of Federal Reserve officials last month that they frequently made dovish remarks.
Therefore, at this week's meeting, the Fed may remain on hold and suspend interest rate hikes for the second consecutive month. The impact of the surge in U.S. bond yields on the U.S. economy will be the main topic of this meeting. The content of Powell's speech at 2:30 a.m. is what is worth thinking about in the future.
Powell said in his speech that the financial environment has tightened significantly in recent months, and long-term yields are an important driver of this tightening, which may mean that the need for rate hikes has decreased, but the rise in yields seems to be unrelated to the market's expectations of further Fed rate hikes. Other Fed officials also said that the willingness to raise interest rates again this year has weakened, and they believe that the yield curve is doing the Fed's job.
A sustained rise in bond yields could tighten financial conditions by leading to lower stock valuations, a stronger dollar and higher borrowing costs for U.S. businesses and households.
The main reason behind the sharp drop in U.S. Treasury bonds is the most aggressive monetary tightening policy in decades launched by the Federal Reserve. Since July 2022, the Federal Reserve has raised interest rates 11 times, raising the federal funds rate to a historic high of 5.25%.
If the recent surge in U.S. Treasury yields is due to investors' expectations that the Federal Reserve will continue to raise interest rates, then the Fed must continue to raise interest rates next, otherwise the financial environment will begin to loosen, which will stimulate a rebound in inflation. However, data shows that the market has already expected the Fed's interest rate hikes to be near the end, and this round of U.S. Treasury bond sell-off is mainly driven by the so-called term premium.
Impact on the Crypto Market:
ETF is something that has been mentioned repeatedly in the past six months. For the cryptocurrency industry, taking the path of foreign exchange and the old path of gold is one of the best directions. Even if the ETFs of institutions such as BlackRock and Grayscale are rejected or postponed in the short term, ETFs will eventually be implemented in the future. Judging from the current response of the SEC, the pull cycle is the last stubbornness. Therefore, for medium- and long-term traders, fixed investment and buying back when the market falls are opportunities that cannot be missed. (This cycle is a bull-bear cycle, not a short-term cycle at the daily level, nor does it mean entering the market immediately)
In the current global overall market value ranking, we can see that only two digital currency assets are ranked in the top 100 or more accurately in the top 50. The first is BTC, which ranks 11th. Although it is lower than gold and silver, it is slightly higher than Tesla. ETH is ranked 47th.
The crypto market has grown a lot compared to the past, but there is still a lot of room in the financial market. As an independent market, we can imagine the vast ocean of stars.
Technical analysis:
Since the bank crash in March, the external environment of the market has not been friendly. The trading volume can be seen to have soared by 30 points in October, but the market trading volume is less than one-fifth of that in the first quarter. Although the market has given a strong expectation, the pressure from above is the real pressure. The locked-in positions above 4 and the long-term profitable traders since 1.5 are all in an area of profit exit and unwinding.
It can be said that the targets after 3.6, 3.8, 4, and 4.2, can all be expected to have a 10-20 point callback. It is currently in the range of 3.32-3.48. If it falls below 3.26, it will go to the next structure, from a narrow range of fluctuations to a wide range and then find a new starting point. The support swap position remains unchanged at 3.15-3.18. The key support level of 1h is still 3.32. If it falls below it, it will see a callback. The pullback pressure level can also be pushed to short according to the position. If it falls below the Z point 3w, it will see the end of the stage market since 2.8 to 3.5. The range 3.1-3.6 will oscillate until it finds a position to start the next market.
(Short-term traders can refer to Uncle Ai’s daily morning trading ideas)
