About the Fed: not just dry facts, but what every trader needs to know
So let's talk about the Federal Reserve System (FRS). Yes, this is the same organization that controls the entire US banking system. But why do we, traders and crypto enthusiasts, need it? I’ll explain now 😎
Why is the Fed so important for crypto?
- US Central Bank: The Fed is not just bankers, they are the guys who decide how we live.
- Balance of interests: The Fed maintains a balance between the desires of commercial banks and the national interests.
- Regulation and Supervision: Yes, they make sure that banks do not play around and follow the rules.
- Consumer protection: This is exactly what saves your money from dishonest lenders.
- Control of monetary aggregates: They manage money so that the economy grows, but without excesses.
- Goals for employment and price stability: Everything is simple here - so that everyone works and prices do not jump.
- Financial stability: Control of systemic risks in financial markets.
- Financial Services: Yes, even the US government and international institutions.
- Payment systems: They are involved in international and domestic payments.
- Liquidity: Eliminate liquidity problems at the local level.
Now do you understand why the Fed is so important? They literally control the economy by playing with bets like children with toys. And the cryptocurrency market also reacts to this - rates are up, crypto is down, and vice versa.
How it works?
Every month, the Fed meets to decide what to do with interest rates. And this is where the fun begins: not only the numbers matter, but also what the head of the Fed says. One hint of a tightening of policy – and the market is in panic. He said something positive - everyone went to buy, and prices skyrocketed 🚀.
What does this mean for traders?
For anyone involved in the market—whether it's cryptocurrency or the stock market—it's important to keep an eye on the Fed's reports. This is one of the key factors for analyzing the situation both locally and globally.
I have written this in simple words so that everyone can understand what it is and why it affects the market. But keep in mind that there are many nuances here. If you start to analyze all the details, you will end up with not an article, but a whole book 📚.
Conclusion
Do you want to understand the market? Google “what is the Fed.” Without this, you will wonder why the market suddenly soared or crashed. Technical analysis won't help here - triangles and indicators won't tell you what Powell is thinking at his press conference.
For fans of technical analysis: not a single indicator or figure will help you understand what the head of the Fed said and when it will happen. For all fans of day trading: study the topic, find out the meeting dates and rhetoric of the head of the Fed - and you will be able to identify local trends.😉
