The state of the U.S. economy is making global markets guess! Now that the 'checkup report' has been released, should crypto friends be 'bullish' or 'lock up' their wallets?
This round of checks on the U.S. economy examined three key indicators:
CPI: Simply put, it's about whether 'things have gotten more expensive?' Latest result: Prices aren't rising as sharply! What does this indicate? It suggests that the Federal Reserve's previous aggressive rate hikes seem to be starting to take effect, and inflation's 'high fever' is cooling down a bit. Good news for Bitcoin! Why? Because if inflation can really be controlled, the Federal Reserve won't need to raise rates so aggressively, and they might even slowly lower rates in the future. What does lowering rates mean? There will be more money in the market, and banks won't generate much profit, so this excess money, which is unhappy with low bank interest, might run off to speculate on something else, like... Bitcoin?
Non-Farm Employment: This looks at 'Are people finding jobs? Is it hard to hire?' Latest result: Fewer people are finding new jobs! Significantly less than experts expected. But on the other hand, the unemployment rate has slightly increased. This is interesting! It suggests that the 'economic engine' of the United States may not be as strong as previously thought. This could be a small positive for Bitcoin! The logic is simple: If the economy isn't so booming, does the Federal Reserve have less reason to continue raising interest rates aggressively? Should they even start considering what to do if the economy 'catches a cold'? Are the expectations for rate cuts a bit stronger? Is the possibility of more money a bit greater?
Federal Reserve Attitude: Once this report came out, the market reacted very directly—everyone basically bets that the Federal Reserve will not raise interest rates in July! Moreover, there are expectations that there might be rate cuts before the end of the year. This is the power of the report!
This 'checkup report' is, in the short term, a shot of adrenaline for Bitcoin! Look at how quickly the market reacted; as soon as the data came out, Bitcoin surged! The core logic is what was mentioned above: Inflation down + Economic signs of cooling + Expectations of stopping rate hikes or even rate cuts = Good news for risk assets! Bitcoin, as a typical 'high-risk preference' asset, is most sensitive to such expectations of monetary policy easing!
Think back to June this year; it was also when the CPI was below expectations, and the market thought, 'Oh, maybe rate hikes are done?' As a result, Bitcoin surged more than 15% in three days! This situation is very similar—again, it's inflation easing + economic data not strong enough, a combination of good news!Therefore, Guoxing believes that in the short term (for example, in the next few weeks), this checkup report will likely give Bitcoin some upward momentum! The stop on rate hikes or even the expectation of rate cuts is currently the most powerful narrative. BUT! Don't get carried away! Don't think this means it's heading straight for $100,000! We need to keep an eye on two points:
Sustainability! Is this inflation cooling just a one-time thing, or can it really continue? How will next month's CPI look? If the data fluctuates, market sentiment can change quickly.
The core issue hasn't changed! The Federal Reserve's ultimate goal is to bring inflation down to around 2%, and we are still far from that! Even if they pause rate hikes, it doesn't mean they will start flooding the market with money immediately. The intermediate process could be quite bumpy.
The cryptocurrency space has opportunities and risks coexisting, staying vigilant and timing is key. I've also discovered a project with great potential for a short-term surge, with huge doubling potential! If you want to keep up, click on my avatar to follow me for free sharing!