Some people say that CPI lower than expected is a good thing, but why didn’t the market rise?
Is it another case of good news turning into bad news?
My answer is: Definitely not
Why are you so sure? Let’s take a look at the following data
CPI is a long-term, dynamic indicator
The effectiveness of a single month's data is limited, and a comprehensive comparison of the data for the entire year is required.
The above is a long-term data trend chart of CPI. It can be seen that the CPI data has been rising since 2021, which means that the inflation rate is high and the price is rising rapidly.
What really changed was that in 2023, the CPI data began to decline, but it was still higher than before 2021, which is very fatal to American citizens.
Over the past three years, the US has accumulated more and more foreign debt, and the purpose of attracting global funds by raising interest rates has not achieved expectations. Secondly, the desire to compete for resources through war has also encountered resistance. At the same time, the sickle that wanted to harvest China has not been swung down. It can be said that it has hit a wall everywhere.
This is the Fed interest rate bar chart
It can be seen that since the interest rate hike in 2022, it has been in a high interest rate environment.
A high interest rate environment means higher borrowing costs, which inhibits consumption and investment, leading to slower economic growth and lower market valuations. The central bank controls inflation by raising interest rates, but this will also affect corporate profits and asset prices.
Combining CPI data with the interest rate chart, you can clearly draw a conclusion: CPI shows that inflation is falling, but the Federal Reserve has been keeping interest rates in a high interest rate environment, which is contradictory in itself.
Therefore, after comprehensive analysis and comparison of these data, my personal opinion is that the probability of a 25 basis point rate cut in September is very high, because the truth will come out sooner or later.
Since CPI is positive, why did BTC fall this time?
That’s because most people view cryptocurrencies as safe-haven assets. Since it is a safe-haven asset, there are many options, for example: gold, US stocks, bonds, etc. These have a much longer history than Bitcoin.
Therefore, in 2024, gold, US stocks, and China's special government bonds all ushered in a good upward trend and became the first wave of the trend, which allowed many investors who were foresighted to reap a large wave of dividends.
Now looking back at what happened in 2023-2024, it may become much clearer. It is reasonable that BTC does not rise, and even the entire crypto market is stagnant.
In short, the big brothers in front have already taken over the wealth they deserve. As the darling of the new generation, cryptocurrency still has a scale that cannot be underestimated. The market that is coming is already on the way.
The six-month market clean-up has wiped out the faith of most people and consumed 90% of the funds of retail investors. Those who should leave, those who should lie flat, and those who should have their positions liquidated have almost all been cleaned out.
In September, Bitcoin stopped falling, and with the start of interest rate cuts, a bonus for the cryptocurrency circle will definitely come. I am still very optimistic about the crypto market after September 11, 2024.
The above is only my personal opinion
