BTC rose to around $99,000 last night, followed by a slight correction before continuing its upward trend, with a potential test of $100,000. Recently, BTC's trend has been relatively independent, but it still shows some correlated volatility with the US stock market in the evening. The US dollar index has also been relatively strong, reaching a new high since October last year, and is expected to challenge the high before November 2022, indicating market expectations for Trump's favorable return to office. This logic is also relatively evident in Bitcoin, especially with Trump's favorable promises to the crypto industry. There are still nearly two months until the power transition, which is also a future cycle to speculate on.
According to CoinAnk data, ETF funds have seen continuous net inflows this week, which also drove the price of cryptocurrencies upward, with over $1 billion inflowing last night:
BTC daily line reported a long positive candle, and after some adjustment, it is expected to continue rising. The current strategy is to buy on the right side during pullbacks, holding onto spot positions, and timely switching altcoins. There is no pressure above the historical high, future heights are all subjective predictions, and only when reversal/top signals appear can judgments be made, at which point market sentiment will change.
Hot topics on November 22:
1. SEC Chairman Gensler confirmed his departure date as January 20 next year;
2. Cboe submitted 4 spot ETF applications for Solana to the US SEC;
3. Market news: FTX's restructuring plan is expected to take effect in early January 2025;
4. Trump's 'Crypto Advisory Council' will establish the previously promised Bitcoin reserve;
5. MicroStrategy completed a $3 billion convertible note issuance to buy more Bitcoin.
US Dollar Index Trend Analysis
On November 22, the US dollar index rose to 107.16, reaching a new high since October last year, and has increased by about 3% since November. The chart shows a recent overall upward trend, gradually climbing in the period from September to November, with fluctuations reaching the current high of 107.1685 and a low of 106.9943. The increase since the beginning of the year has reached 5.71%.
Reasons for the rise in the US dollar index: Changes in market expectations for Federal Reserve interest rate cuts: People increasingly expect that the Federal Reserve may slow the pace of rate cuts, and market expectations for the Federal Reserve to pause rate cuts in December are heating up. According to CME's FedWatch tool, the current market expectation of the likelihood of pausing rate cuts has risen from 17% last week to 44%. This change reflects the market's ongoing digestion of the future policy impacts of the US government and the cautious attitude of Federal Reserve officials toward the future path of monetary policy easing.
Weakness in the euro provides support: The euro has been weakening since October, providing support for the US dollar index. Europe faces geopolitical factors, slowing economic growth, and pressure related to the 2025 budget. Additionally, under the 'impact of slowing exports', the European Central Bank may loosen monetary policy more than usual. It is expected that by the end of 2025, the exchange rate between the euro and the dollar will remain close to 1:1.
Federal Reserve officials' speeches and their impact: Michelle Bowman expressed disagreement with the Federal Reserve's significant 50 basis point rate cut in September and emphasized this week the need for cautious advancement of the rate cut policy. She believes that the pace of rate cuts should be better assessed relative to the distance from the final goal, while also noting that inflation is a key reason for rate cuts and that recent inflation progress has stalled.
Lisa Cook: Pointed out that the pace and extent of rate cuts depend on economic data and economic outlook, emphasizing the need to gradually transition to a neutral policy stance over time.
Powell: In a speech in November, he stated that the Federal Reserve has no 'urgency' regarding interest rate cuts, and the current strong economic performance allows for cautious decision-making. These remarks further strengthened market expectations for the Federal Reserve to pause interest rate cuts in December.
Future trends of the dollar: Some institutional views suggest that the dollar will remain strong in the short term but will find it difficult to continue strengthening by 2025.
UBS Group's view: The strength of the dollar is due to investors' expectations of favorable policies, but the recent rise is not aligned with historical interest rates. It is expected that by the end of 2025, US interest rates will be lowered by another 125 basis points (the market expects 72 basis points). The dollar may correct its excessive rise, and the euro will gradually appreciate.
JPMorgan's viewpoint: The dollar is structurally overvalued and may weaken further in the context of an expanding deficit due to future expansionary fiscal policies in the US. Investors are advised to reduce their dollar asset exposure during the dollar's strong period, such as hedging risks, shifting investments to other currency assets, or using options strategies to profit from the dollar appreciation risk.
Written by: laolibtc
