Xiao Yihang: Bitcoin bulls restarted on October 12 and will soon challenge 66,000 and advance towards 68,000. Don’t miss it!

　　

Since entering October, a series of data released by the United States have poured cold water on expectations of interest rate cuts, leaving room for optimistic sentiment to ease. The Federal Reserve has also hinted that the market should not have too high expectations for the policy of flooding the market with money.

　　

Although there have been great chairmen like Paul Volcker in the history of the Federal Reserve, who successfully controlled high inflation in the United States in the early 1980s and firmly maintained the independence of the Federal Reserve without interference from the two major parties in the United States.

　　

In 2008, Volcker, chairman of Obama's Council of Economic Advisers, introduced the "Volcker Rule" to strengthen supervision of financial institutions, restrict banks' proprietary trading, and prevent banks from taking excessive risks. Since then, the Federal Reserve has become more confident that it can control and regulate the US economy and that there will be no financial crisis like that of 2008.

　　

So, does the current Fed Chairman Powell have the ability of Volcker? I think time will tell. Since the second term officially started on May 23, 2022, half of the four years have passed. Powell's conservative character is very obvious, and the deeper manifestation is that he does not want to take responsibility.

　　

Why do I say this? Since the mask incident in 2020, the Federal Reserve has chosen unlimited quantitative easing and purchased a large amount of corporate bonds and local bonds, resulting in U.S. inflation as high as 9.1% in a short period of time. The reason for the surge in inflation is the zero interest rate of U.S. banks.

　　

Afterwards, Powell chose to raise interest rates by 525-550 basis points, raising the federal interest rate from 0 to 5.25%~5.5%, a total of 11 consecutive rate hikes. The cost of the rate hike was a rapid decline in the global economic growth rate. Inflation was alleviated, but the cost was borne by non-US countries around the world.

　　

Then, there was no movement for 10 months. The story of the wolf coming was told every day, but no one talked about interest rate cuts. The slogan was that US inflation had not reached 2% yet, and it was inappropriate to cut interest rates too early. The expectation of interest rate cuts was hyped back and forth to delay time, until September 18 this year, when the Federal Reserve decided to cut interest rates by 50 basis points at one time.

　　

Finally, global market sentiment was ignited, with people believing that the interest rate cut had finally taken place and that the Federal Reserve would cut interest rates even more vigorously before the end of the year to stimulate the market. Gold once again saw a surge in late September, which was the pricing and realization of expectations for subsequent interest rate cuts.

　　

As a result, the September non-farm data increased beyond expectations, and the September CPI and PPI were all lower than expected. What does this mean? The US economy is not as bad as the market rumors. There is no plan to cut interest rates by 50 basis points in November. 25 basis points is already good. By manipulating data and guiding market sentiment, a positive response is given to the US economic recession theory.

　　

​In the past two years, Powell's overall performance shows that he is calm enough and conservative. In fact, from the radical QE in 2020 to the final QT, from interest rate hikes to interest rate cuts, the core of the Fed's slow response is that Powell does not want to take responsibility and waits until the market reacts very hotly before making decisions, including the previous interest rate hikes that waited until inflation was ridiculously high before starting, and the same is true for this interest rate cut.

　　

In other words, Powell's personality will be used by the market to speculate on expectations, such as when the Fed will cut interest rates, whether the Fed will cut interest rates, and how much the Fed can cut interest rates. Then, the market will use expectations to harvest, especially when Bitcoin falls, to lure the longs into buying. The Fed will not cut 50 basis points, but 25 basis points. Bitcoin is about to peak. If you think carefully, no matter how much it cuts, will it cut? As long as the Fed cuts interest rates, Bitcoin will definitely rise, it's just a matter of how much it will rise and when.

　　

Today, I wrote the above logic to share two points:

　　

1: Short-term data will not change the long-term trend. I said that the general trend has been rising since the bottom of 52,500 in September. After the adjustment in early October, the long position has been reopened. 66,400 in October is not the top. It will break through this month. This is my recent view! Mid-term fluctuations should be tolerant for long-term investment. If short-term fluctuations affect the mentality of holding positions, then reduce them until you can sleep, or simply don't be jealous of other people's long-term profits, because you can't afford to eat this job.

　　

2: Powell is not Volcker, and it is impossible for him to become Volcker. The economic cycle is volatile. Whoever tries to control the volatility or is afraid of the volatility will be eliminated by the market. Powell is not a drastic reformer, he is a conservative. What he has to do is to try his best to prevent the U.S. economy from being destroyed during his term, but it does not mean that the U.S. economy will never set.

　　

Bitcoin is no longer the commodity that was decoupled from the US dollar. In recent years, the recognition of Bitcoin by global investors, investment banks and the market has been gradually increasing, and the investment value of Bitcoin has also been increasing. However, the US debt has been seriously overdrawn, and it is now difficult to pay the interest, not to mention the principal. More and more countries dare not buy US debt, for fear that they will be spit blood in their faces when the US economy collapses. Global money printing will accelerate currency depreciation.

　　

In fact, Bitcoin has not changed. One Bitcoin will still be one Bitcoin after 10 years. What has changed is the currency itself. Money has become worthless. The economy is doomed and needs to be saved. Money must be used to save it, whether it is bonds, interest rate cuts, or even stock market rises. The fundamental reason is that there will be more money in the market. Money is also a commodity. If it becomes worthless, it will become worthless. More money is needed to buy coins. The value of Bitcoin is relatively limited. This is the essence of the rise in Bitcoin.

　　

Therefore, the $66,400 level of Bitcoin in October is not the top. The adjustment is just brewing a new round of rise. It will soon hit 66,000 and move towards 68,000 or even return to 70,000. Whether you believe it or not is not important. What is important is whether you have chips in the bull market. This round of rise will be the last time this year to enjoy the dividends of the trend. Only the brave can become the darlings of the times. When any opportunity comes, you have to stand in the center of the stage to have a chance to get the trophy of the trend.