Macroeconomic interpretation: As I talked about this morning, people in the crypto circle still don't pay much attention to macroeconomic data and policies. The PEC index at 21:30 this evening was quite unexpected. #PCE通胀降温 , the price index that measures inflation, hit a five-month low, which means that the Fed's interest rate policy may remain loose in the future, which will be bearish for the US dollar and bullish for dollar-denominated assets such as #黄金 , #美股 and the crypto market, and the market also had an immediate reaction.
Today, the crypto market was completely dragged down by the US stock futures and fell all day. The US stock futures stopped falling and rebounded a little after the data was released. The mood may be slightly relieved. After all, the Fed meeting statement and Powell's statement the night before were too hawkish. After the data is released tonight, the market expects that the Fed may no longer be so hawkish about the inflation level. The opening of the US stock market was also affected by the sharp fluctuations in futures during the day and opened with a gap. The Nasdaq opened about 1% lower, which was a reaction to the oversold US stock futures during the day, close to the closing position of the US stock futures after the oversold rebound. However, the US stock futures and the crypto market have completed most of the decline during the day. Unless there is a sharp drop in the evening, it will affect the currency market. If the US stock rebounds, it will be beneficial to the rebound of BTC.
Tonight, the global economic community is focusing on the release of the last key economic data of the year, namely the US core personal consumption expenditure (PCE) price index in November. This data unexpectedly fell, attracting the attention of the global market and some unusual market movements. The inflation indicator closely watched by the Federal Reserve, the core PCE price index, has an annual rate and a monthly rate that are lower than market expectations, as shown in the following:
Annual rate data: The core PCE price index in November was 2.8% annually, the same as the previous value, but lower than the market expectation of 2.9%. This result broke the normal state that the core PCE price index usually closely followed market expectations, showing subtle changes in inflationary pressure.
Monthly rate data: The core PCE price index in November was 0.1% on a monthly basis, down from the previous value of 0.3% and lower than the market expectation of 0.2%. This lower-than-expected growth rate further highlights the slowdown in the inflation trend.
What is unexpected about this data? The unexpectedly lower-than-expected performance of the core PCE price index, as an important reference indicator for the Federal Reserve to formulate monetary policy, may reflect the weakening of inflationary pressure in the US economy. Previously, based on the forecasts of CPI and PPI data, analysts generally expected that the core PCE price index would maintain steady growth, but the actual situation shows that inflationary pressure may not continue to increase as expected. The Fed's response to this data may also be unexpected by the market, especially after San Francisco Fed President Daly expressed concerns about inflation stickiness. This shows that there may be a certain deviation between the inflation expectations within the Fed and the actual situation, which may affect its future monetary policy decisions.
Market reaction and subsequent impact: After the data was released, the U.S. dollar index fell significantly, while gold, U.S. stock futures, crude oil and crypto markets rebounded. The market reaction suggested investors were optimistic about easing inflationary pressures, fueling gains in safe-haven assets and a rebound in risk assets. At the same time, market concerns that the U.S. government may shut down this weekend have also increased market volatility. However, it should be noted that this rebound may only be a short-term market reaction, and subsequent trends still require close attention to changes in economic data and the Federal Reserve's monetary policy decisions.
Future Outlook of the U.S. Stock Market: The closing of the U.S. stock market tonight is crucial to determine the market trend. If the U.S. stock market falls further, it may exacerbate the pessimism in the market and have a chain reaction on global stock markets. The sharp drop in the U.S. stock market this week has raised concerns about the health of the stock market, especially considering the high valuation of the stock market and the fact that the Federal Reserve's policy may not be as loose as expected. Therefore, the market needs to be alert to the first possible bearish person, which may become an important turning point in the market trend.
Market Analysis:
#BTC The trend line support showed signs of breaking in the afternoon, but considering the previous sharp rise, the decline is also a normal retracement. However, some altcoins have fallen to the level of the US presidential election on November 5-6. Ashes to ashes, dust to dust. The crypto market fell across the board. According to Coinank data, the altcoin index has fallen again to around 48, and is expected to be lower tomorrow based on the market update.
Regarding the peak of altcoins, I told everyone in early December, one or two weeks in advance, that if the altcoin index rises above 85 in the future, you should pay attention to the risk area. In fact, it started to fall sharply from the highest point of 88. I have always adhered to the concept that the altcoin rebound is not sustainable, and rotation means timely profit reduction after the rise.
From late November to early December, I gave tips and interpretations on the Shanzhai Index. From the healthy state of around 48 at the beginning of the effort in late November, to the continuous related tips, to the warning at 78-80 later, when it exceeded 85, it would enter the risk zone. In fact, it peaked and fell after a few days, especially starting to fall sharply on December 10.
At the four-hour level, BTC closed below $96,800, which can be seen as a downward break. Breaking below the trend line means that the future medium- and short-term trend is bearish. The short-term support below is around $92,230/90,500. The medium-term support still looks at the starting point of the trend line around $85,000.
In fact, it mainly depends on the U.S. stock market. As I said before, if the U.S. stock market is at the top of the stage, BTC will also follow a sharp correction in the future.
At present, many people like to attribute the reasons for the decline to Powell's remarks on the strategic reserve of Bitcoin. This is actually a lack of understanding of the macroeconomics and the bearish logic of the Federal Reserve's interest rate resolution and statement. They only stay at the narrative of the crypto industry. In fact, from the bull market at the end of 20-21 to the top, the crypto market has almost all converged with macro policies and the top of the US stock market. Especially in the past three years, the mining industry has shifted to North America, and the Bitcoin spot ETF was listed and traded in the United States at the beginning of this year. The pricing power of BTC has been almost entirely controlled by the US market. The continued decline of US stocks overnight will naturally affect the crypto market led by BTC. This is also why I often mention the operating macro logic of the US stock market, the US dollar index, gold, etc. and its impact on the crypto market in my analysis.
