To deal with the situation in September, we can focus on four key factors that affect the price of #比特币 . If there is a sharp drop this month like before, it may be related to the following events:

Long-awaited rate cut

Yen carry trade

The size of the rate cut

Non-farm payrolls data released - this Friday (September 5)

All of these events affect each other, and several possible scenarios for short-term trading plans will be discussed later.

Long-awaited rate cut

The Federal Reserve has clearly agreed to cut interest rates and will announce the decision at its monthly #FOMC meeting on September 17-18. How the market will perform before then depends on other factors.

How big the interest rate cut will be depends on unemployment data

At present, the interest rate cut itself is neither a bullish catalyst nor a bearish catalyst. The market has been expecting a rate cut, and #美联储 has also confirmed this. The key lies in the details, that is, how much the rate cut will be.

On September 5, non-farm payrolls and unemployment will tell us what actions Powell may take

Poor employment data (high unemployment) will justify a rate cut, increasing the likelihood of a 50bp cut, which is the most positive scenario for the market to react to.

Strong employment data (low unemployment) means that inflation is hard to get rid of, and interest rates should remain high to prevent inflation from rising. No one will like this result.

But hesitant#Powellhas already promised that a rate cut will happen, even if it is small (such as 0.25%), this rate is not enough to arouse any bullish sentiment. They hope to at least stabilize the market before the election and do not want the market to crash before the election.

Yen carry trade

Yen carry trade refers to borrowing Japanese yen at a lower interest rate and investing it in other currencies with higher returns. Investors profit from the difference between low borrowing costs and high investment returns.

This is a potential time bomb that the Democrats certainly don't want to detonate before the election. Whether the yen will experience a similar collapse as on August 5 depends largely on how the Fed decides to cut interest rates.

With rate cuts, the gap between the dollar and the yen narrows, the yen strengthens and the yen against the dollar is no longer as profitable, which eventually forces traders to close their trades and thus sell risk assets like stocks, which is why the crash happened on August 5th, and there is a possibility that we will experience another crash

As of now, the Japanese yen has returned to the level of the collapse on August 5. According to the latest report, the size of YCT is estimated to be 764 billion US dollars, which is almost half of the market value of BTC. This can show how large the share of traditional finance is.

Compared with this, the cryptocurrency market is so small. Since many transaction data are not counted, the scale may be higher. If a black swan comes, we cannot underestimate the destructiveness of this domino effect.

Since interest rate cuts are inevitable, there are risks. Therefore, the extent of the interest rate cut is very important. The higher the interest rate cut, the more likely it is to wake up the sleeping raccoon.

As for the trading plan, this month can be divided into three stages:

Now to the release of employment data and after the release of employment data and after the interest rate cut and after the interest rate cut

Phase 1: Before Non-Farm Payrolls

As of now, retail investors seem to be eager to enter the market at the 57K level last weekend. According to technical indicators, this may be one of the bottoms, but the risk is also high because the employment data released on September 5th may still fluctuate. It is better to wait until this Friday.

Phase 2: After the employment data is released, there are two possibilities

a. Strong employment data

Strong employment data is not conducive to inflation, and the rate cut cannot be too large, so the market will expect a 25 basis point rate cut, which is the worst-case scenario and may even be unfavorable to $BTC . Before the next FOMC meeting, Bitcoin will continue to consolidate and test the bottom.

b. Weak employment data

The probability of a 50bp rate cut would be higher, by which time Bitcoin may have bottomed out and will rise with other risk assets until the rate cut occurs. If so, there are not many opportunities to buy Bitcoin at a low price between NFP and FOMC.

The third stage: after the interest rate cut, it is necessary to combine job data, there are four scenarios

a. Strong employment data + 25 basis point rate cut (horizontal)

The Fed's smartest choice, strong employment data does not justify further rate cuts unless inflation is expected to pick up. A slight rate cut will be enough, which is what the Democrats dream of, having a strong labor market, controlled inflation and a strong stock market.

However, this is not the case for #比特币 . It is predicted that traditional finance will consolidate or slowly climb near its high level. This is obviously not enough for Bitcoin, which needs a stronger catalyst. Bitcoin may bottom out again in the rest of this month. If you are long in the previous stage, you can consider preparing stop losses and don’t expect to take profits before October.

b. Strong employment data and a 50 basis point rate cut (impossible, but definitely bullish if it happens)

If Powell does this, he must be insane, low unemployment means inflation is stubborn, and he should raise rates instead of lowering them, in which case the stock market will soar after the announcement (but will eventually crash as the yen carry trade unwinds, though not quickly)

If this is the case, we can hold Bitcoin until October or even longer, but we need to take profits in time before the #日元套利交易 crash

c. Poor employment data, interest rates cut by 50 basis points (bullish at least in September)

A 50bp rate cut is more likely when the labor market is weak, and therefore more likely than scenario B, but the impact on the market will be similar and the trading plan will be similar.

d. Poor employment data and a 25 basis point interest rate cut (bearish)

The unemployment rate remains high, but Powell insists on a small interest rate cut, hoping to further cool the economy

Wall Street will not like this, in the previous period, between#NonFarmPayrollsand FOMC data, bad employment data is good for the market and risk assets may rise, but a smaller rate cut will immediately reverse the trend, which almost guarantees a sell-off on the news

If anyone is long between the employment data release and the rate cut, please take profits in time and expect more volatility for the rest of the month.

Notes on scenarios b and c: Currently, the consensus rate for a 50 basis point rate cut is only 33%, regardless of whether the employment data is good or bad, and the rate cut may only increase slightly due to poor employment data.

In short, a 50 basis point rate cut is both a miracle and a potential disaster (related to the yen carry trade).

If scenarios b and c do occur, further follow-up and modification of the plan are required.

If you think this article is useful to you, please forward it to people in need so that more people can participate in the discussion. Finally, I wish you a happy transaction.