On July 24, 2023, the global financial market is closely watching the Federal Open Market Committee meeting of the Federal Reserve to be held on July 25-26, and is expected to release the interest rate decision after the meeting. Prior to this, the US Consumer Price Index (CPI) data in June showed that inflationary pressure continued to slow down, and the market generally predicted that the Federal Reserve would raise interest rates by another 25 basis points at this meeting. However, some observers believe that this may be the last time in this round of interest rate hikes.
According to data released by the U.S. Department of Labor, the U.S. CPI rose 3% year-on-year in June, falling for 12 consecutive months to the lowest level since March 2021. The core CPI rose 4.8% year-on-year and 0.2% month-on-month after excluding food and energy prices, both of which were the lowest records since 2021. These data show that inflationary pressure is gradually weakening.
The market generally expects the Fed to raise interest rates by 25 basis points in July, bringing interest rates to a range of 5.25%-5.5%. However, most people believe that this may be the last rate hike in this round of rate hikes. The FedWatch tool of CME Group shows that as of July 20, the probability of the Fed raising interest rates by 25 basis points in July is close to 100%.
Now, the market's focus has begun to shift to the future direction of monetary policy. September will be a key node, when Fed officials will release their interest rate expectations, which will roughly determine the monetary policy trend for the remaining three months of this year. Regardless of whether there will be a rate hike in September, the probability of a rate hike in the fourth quarter is relatively small. Therefore, many investors believe that September may be a turning point in monetary policy.
Before September, there will be relatively few positive news in the market, while negative news may increase. Considering that many people predicted that the market might fall in the second half of 2019 before 2019, they will naturally not wait until after September to choose to sell assets. In addition, after many unsuccessful attempts to rise, the probability of falling is higher, the probability of sideways fluctuation is lower, and the probability of rising is also very small.
However, after September, the market may gradually develop upward. This is because the expectation of interest rate cuts next year may affect market sentiment in advance. From the chart, the support level of Bitcoin seems to be around $28,000, but it is likely to break below. On the one hand, we have heard many stories about "the wolf is coming", and no rule can be repeated for the third time; on the other hand, after September, the possibility of interest rate hikes is greatly reduced, and it may even enter a rate cut cycle. High interest rates do have certain risks, but expectations are often reflected in the market in advance. Therefore, before the September Fed meeting, the main funds may have a round of pullbacks to absorb chips.
In addition to the above views, there is another interesting logic. The market in 2023 seems to be similar to the market between 2015 and 2019. The market fluctuated in the first half of 2015, rose rapidly in the first half of 2019, and the market also fluctuated in the first half of 2023. The market rose in the second half of 2015 and fell in the second half of 2019, which means that I think the second half of 2023 may fall first and then rise, which seems to be in line with this logic.
Planning for the next bull market
No matter how the market moves, the only certainty is that you should look for opportunities to buy at the bottom when it falls. Next, I will focus on the layout of the next bull market.
For small investors, the recommended strategy is to take out 60% of the funds and choose 2-3 sectors for regular investment, and select an undervalued currency in each sector. These currencies may not be the leaders, but before buying, you should conduct a serious project research, evaluate their endorsement and your own reasons for being optimistic about the project or field. The most suitable currency should have a market value between 8 billion and 20 billion.
Next, take out 15%-20% of the funds to buy stalk coins, such as dogecoin, shitcoin, pepecoin, love dogcoin, etc. Choose those currencies with good mechanisms, active projects, and have been listed on exchanges, so that they are not easily rushed.
The remaining 20% of the funds can be used as working capital, because every bull market will have new stories to drive the market up, and such a market may bring many high-quality currencies in the top ten in market value. This part of the funds can be used to bet on new currencies or buy the promising currencies at the bottom to cover the positions in batches.
In addition, please remember an important principle, that is, gradually withdraw cash after making money, otherwise a big market drop may cause you to lose all your profits or even lose money. It is very important to handle funds with caution.
In general, the Fed's interest rate decision has become the focus of global investors. Although the current inflationary pressure has slowed down, the market generally expects the Fed to raise interest rates by 25 basis points at this meeting. However, the future direction of monetary policy is still uncertain, and we need to pay close attention to the Fed meeting in September and data changes in the next few months. In any case, small capital investors should formulate reasonable investment strategies based on their risk tolerance and investment goals, and always pay attention to fund security and risk management.