May 28, 2024 Grandpa checks in

ECB Chief Economist Lane said that the ECB has begun to prepare to lower interest rates, and is expected to start cutting interest rates in June, and does not rule out the possibility of a second rate cut in July. Although the market is most concerned about when the Fed will start cutting interest rates, the ECB's statements and actual actions may have a certain role in predicting the Fed's actions. This round of interest rate hikes in Europe and the United States is basically synchronized, and the Fed's first rate cut has also been gradually put on the agenda recently, and is expected to be between September and December in the second half of the year.

The interest rate cut is definitely good for the market, which will bring more liquidity to the market, and will eventually flow into the financial circle. As a popular choice for investment today, the B circle will also benefit from the overflow of liquidity. However, as with the previous interest rate hike, it takes time for real funds to flow into the market, especially the crypto circle, generally speaking, it takes half a year to a year. In other words, from the moment of the interest rate cut, the market in the next six months is likely to be a period of volatility, and it is not the imagined influx of funds that causes the rise.

According to the four-year cycle of the B circle, the real bull market will not come until next year. The core logic is still the reduction in supply caused by halving. After the halving occurs, it often takes more than a year for the effect to begin to appear in the market. Combined with the pace of interest rate cuts, I am still optimistic about the market next year. Under this premise, the next six months to one year window is still a good time for us to build long-term chips. Although the prices of many coins are indeed not in the best position, for the bull market, having chips may be more important.

In the short term, the market is somewhat contradictory. Ethereum's trend and funding are strong, but Bitcoin has no other positive drivers and the resistance at the pressure level is very large. However, the core of the currency circle still depends on Bitcoin, so the short-term pressure of 4,000 points on Ethereum is still valid for the time being. Bitcoin's ETF is relatively stable, and the capital flow is not very obvious, but you can see that even in the previous decline, Bitcoin's decline was limited, so if it is spot, especially if there is still capital cost, you can continue to hold it.

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