Fed’s Mixed Messages: Markets React, Crypto Bleeds
The Federal Reserve’s latest meeting sent shockwaves through the markets. What should have been a stabilizing moment turned into a perfect storm of uncertainty. Let’s unpack what happened—and what it means for crypto.
The Fed’s Confusing Narrative
Powell’s message was bizarre:
• “Recession has been avoided, the economy is strong, and next year will be great!”
But then:
• Inflation targets weren’t met (though it’s mostly a technical issue).
• Jobs are weakening faster than pre-pandemic levels, yet the Fed is “hopeful” about stopping the fall.
Mixed Data Signals
• GDP: Q3 revised to 3.1%, beating the 2.8% forecast.
• Unemployment Claims: Initial claims at 220k (better than 230k expected), with continuing claims slightly lower.
• Job-Finding Rate: Powell highlighted its sharp decline, mirroring drops seen in 2001, 2008, and COVID recessions.
Add to that rising unemployment, a falling employment-to-population ratio, and the recently uninverted yield curve—all classic recession signals.
Crypto’s Volatile Reaction
The crypto market plummeted, here’s why:
1. Rate Cut Fallout: The Fed’s 0.25 bps cut, meant to boost growth, signaled economic weakness.
2. Investor Shift: Risk assets like crypto dropped as investors moved to safer bets.
3. Massive Liquidations: Over $850M, mostly longs, were liquidated, fueling the sell-off.
What’s Next?
Here’s the silver lining:
• VIX Spike: Yesterday’s big VIX jump often signals a rebound within 30 days.
• Market Reset: Patience now could pay off later.
• BTC.D: Watch dominance—if it hits 60%, alts could suffer.
Volatility is high, and the market is waiting for clarity. Until then, doing less might be your smartest move.
If you’re unsure how to approach this chaos, consider copy trading with me. Let’s ride out the storm and position ourselves for the next wave. Click here to copy and: 🚀💰