BTC was weak on the CPI release, but the data seems to have passed without much concern. The ex-shelter 1.7% and YoY 2.9% again confirmed that the disinflationary trend is clear. Since prices have been in a disinflationary trend for the past year, as I have always said, labor/growth data is more important than prices. Inflation is okay as long as it does not increase significantly. I think the current inflation level is sufficient for the Fed to start cutting rates in September. I expect a 25bp cut in September if there is no major change in the data in the future. Chairman Powell is likely to make a positive statement on this in Jackson Hole next Friday.
Yesterday’s claims data showed how overdone the recession fears were last week. CPI data was good, claims were low, retail sales were strong, Walmart earnings were strong. In other words, recession fears have eased a lot. When the market is overly concentrated on one side, it’s a clear opportunity. I still think there will be no recession in 2024.
In the same vein as above, bond prices were significantly extended last week due to excessive recession fears. People were arguing that the Fed should immediately and urgently cut rates. This week, as recession fears have diminished significantly, bond prices have fallen as expected. I see this as a normalization process.
Stocks have been moving up this week, reacting accurately to macro data, but BTC is particularly weak. Yesterday, I expected BTC to be bullish as IWM rose, but the actual movement was completely different. There is no clear trend direction, no clear correlation. It is a very difficult market, but BTC seems to be reacting greatly to individual issues such as Mt.gox, US gov, etc. It seems likely to be unstable until the end of August, as per the previous view.
There is always a chance that BTC will fall further, but I personally have no desire to sell BTC in this macro & liquidity environment. In a Goldilocks environment where disinflation + growth continues, the interest rate cut cycle is about to begin. Currently lagging behind stocks, but I expect BTC to catch up.
Due to the existence of various uncertainties such as Israel-Iran issues, Japan earthquake, CPI, OpEx, Mt.gox, US gov, etc., the current short-term positioning of the market has been weak since last week. While there are certainly areas to watch out for in the short term, it feels like this potential bearish event is coming to a close as we head into the last week of August.
There is news that several institutions have bought MSTR, including the National Pension Service of Korea. This is surprising news. I interpret this as a growing interest in BTC.
NFA DYOR
<Source : TradingView, Velo, Greekslive, Guy Berger, Eric Wallerstein, CrossBorder Capital, Investing.com>
Comments