1. Buy the rumor (before the interest announcement):
- When there are expectations or rumors that the Federal Reserve will cut interest rates, investors start buying Bitcoin.
- The reason is that lower interest rates mean increased liquidity and lower returns on traditional assets such as bonds, making Bitcoin an attractive investment option.
- As a result, the price of Bitcoin is gradually rising based on these expectations, even before the official announcement. đ
2. Selling the news (after announcing the interest):
- Once the official announcement of the interest rate cut is made, even if the forecast is correct, investors start selling Bitcoin to make profits.
- Here the price drops rapidly, even though the news may be positive for the market. đž
Why is this happening? đ€
- Pre-pricing: Investors often anticipate news and start buying Bitcoin before the announcement, causing the pre-pricing to rise.
- Profit taking: After the news is released, investors who bought during the rumors sell their assets to take advantage of the profits, which puts pressure on the price down. đ
Simple example:
- If there is an expectation of a rate cut, we may see a rise in the price of Bitcoin before the announcement. Upon the actual announcement, investors may sell, causing the price to drop quickly even though the decision was positive.
âBuy the rumor, sell the newsâ is a strategy that leads to rapid volatility in the Bitcoin market, especially during major economic events such as interest rate decisions, as investors act based on expectations and then take profits when the news comes to pass. đ
#TopCoinsJune2024 #BinanceTurns7 #MarketDownturn #IntroToCopytrading
