Why a few months ago bad news was good news for stocks and $BTC, but now bad news is bad news and good news is good news?
1. Changes in inflation data: The recent CPI report shows that the most stubborn components of inflation are on a sharp downward trend. This creates confidence that inflation is being controlled better.
2. FED's policy prediction: The FED has shown signs of almost certainty (90%) that it will lower interest rates in September. If not in September, it will be lowered later. When interest rates fall, this is often seen as a positive signal for the market, as it reduces borrowing costs and spurs investment.
*Current stage of the market:
Recession guessing phase: Currently, the market is entering a phase where investors are guessing whether a recession will occur or not. This is especially important considering that the last two times the FED lowered interest rates, both had large fluctuations.
Abundant cash: With the current abundant amount of external cash and the fact that the FED will sooner or later have to continue pumping money out when the economy weakens and inflation decreases, the trend of pumping money will continue.
Loosening credit: Loosening credit will help business lending become strong again. This can also be considered as a easing for investors to pour into risky investment channels such as derivatives, coins, and stocks.
Future forecast: Ignoring all current fluctuations, the trend of massive money injections will continue, leading to an increase in credit and investment in risky assets. At the end of this year or early next year, the market will likely grow strongly again.
