1. BTC price performance
From the perspective of market performance, BTC not only accumulated a large trading volume in the low-cost area, but also showed a sustained rebound. Based on this judgment, BTC is experiencing a rebound performance after relatively full oversold. At present, the increase of BTC is still limited within the range. With the recovery of trading volume, BTC is moving towards the pressure level of $28308 corresponding to 61.8% of Fibonacci.
In terms of support, the 78.6% Fibonacci support of $17246 is still valid, and the selling pressure performance can be paid attention to before the range increase reaches $28308.
BTC prices saw their first strong rebound since the Federal Reserve raised interest rates by 75 basis points in June. There is less than a week before the next interest rate meeting of the Federal Reserve, that is, from July 26 to July 27. The market generally predicts that the Fed will raise interest rates by 75 basis points, but the probability of raising interest rates by 100 basis points is also relatively high.
2. The probability of the Federal Reserve raising interest rates is still on the way
As the inflation data still increased year-on-year, the CPI of the United States increased by 9.1% year-on-year in June, breaking a 40 year high again. The components related to rent increased rapidly. In response, Nomura Securities released a research report that a series of new data will support the Federal Reserve to take more radical actions, so it maintained its expectation that the Federal Reserve would raise interest rates by 100 basis points in July, higher than 75 basis points in June.
In fact, investors also have great differences on the judgment of the Fed's interest rate hike, but the judgment on the basis point of interest rate hike is still inclined to 75 basis points so far. According to the "fedwatch" tool of the Chicago Mercantile Exchange Group (CME), 35.6% of investors bet that interest rates will be increased by 100 basis points in July. 64.4% of investors bet that the Federal Reserve would raise interest rates by 75 basis points in July. In terms of the impact on the market, although the probability of raising interest rates by 100 basis points is less than 50%, it may be the focus that investors have to pay attention to.
3. The Fed may raise interest rates until 2023
However, at present, the benchmark interest rate of the Federal Reserve still has a large room for recovery by the end of the year. According to the evaluation of appropriate monetary policy by the participants of the Federal Open Market Committee, the target range of the federal funds rate in 2022 is expected to be between 3.125% and 3.875%. Among them, eight people think the benchmark interest rate should reach 3.375, and four people think it should be at 3.625%. There are 5 people at 3.125. Based on this judgment, the current benchmark interest rate of the Federal Reserve of 1.75 is still far from the target. Based on the target interest rate of 3.375%, the interest rate needs to be increased by 160 basis points before the end of the year. More importantly, as many as seven people predicted that the target interest rate in 2023 would be 3.625%. There are also four people from 3.875% to 4.125%.
Judging from this, the Fed's interest rate hike cycle will continue until at least 2023. Of course, this also needs to be judged according to the level of inflation.
At least until inflation is controlled, the Fed will not weaken its efforts to raise interest rates.
4. Raising interest rates also has "stumbling blocks"
When more investors generally predicted that the Federal Reserve would raise interest rates by 100 points, the dollar index continued to soar, which became an issue that the Federal Reserve needed to consider when raising interest rates. The depreciation of the US dollar is the basic demand of the US economy. However, whether it is because of risk aversion, the US dollar index rose higher, reaching 109.30 points, which is the highest value in the past 20 years. On July 20, the US dollar index retreated to around 106.5 points, with limited callback space. Therefore, when considering the intensity of interest rate hike, the Federal Reserve may also consider the performance of the US dollar index.
5. BTC inflation rate and US dollar real interest rate
The inflation rate of BTC will remain low, and will continue to decrease with the reduction of mining incentives. At present, the inflation rate of BTC has retreated to around 1.72%, and its price attractiveness has increased.
The attractiveness of the US dollar will increase in the process of raising the expectation of interest rate hike. The reason is very simple. The interest rate hike reduces the inflation level of the US dollar's additional issuance, making the US dollar seem to have greater investment value.
In the Fed's interest rate hike cycle, the discovery of dollar value will also correspondingly reduce the attractiveness of BTC to investors.
Next, we should pay attention to the next production reduction cycle of BTC. After the production reduction in May 2020, the next production reduction of BTC will begin in the middle of 2024. Therefore, it will take less than two years to reduce the inflation rate of BTC. During this period, the Fed may provide an opportunity for BTC's price adjustment when it continues to raise interest rates in response to inflation.
6. BTC main escape addiction
Judging from the escape trend of the main force, the frequency of changing hands of the main force was still at a high level before the Federal Reserve raised interest rates. The latest data shows that the number of coins destroyed per day in BTC reached the peak level again on July 19. The peak value of the number of coins destroyed per day is high, and it has always maintained a high-frequency trading state since February 2022. It can be seen that the main force changes hands frequently. At the point, there is still a need to reduce positions below $24000. Therefore, we need to be cautious in judging the increase.
When judging the main changes, the number of coins destroyed per day involves two parameters: the holding time and the number of coins, so the accuracy is more worthy of attention.
