Recently, the crypto market has been exceptionally lively, with BTC hitting new highs. However, amidst this wave of enthusiasm, the dollar suddenly 'popped up,' leaving people confused. What economic secrets are hidden behind this? Today, Big H will take everyone to explore.
First, let's discuss the recent rebound of the dollar. Deutsche Bank expert Michael Pfister believes that the dollar had previously fallen too much, and this is just a technical rebound. It's like a worker who has been staying up late; no matter how much they can endure, they still need to catch their breath. Recently, the dollar index (DXY) hit a one-month low, and the bears made a fortune, so it's completely normal for short-term positions to be covered. But don't be fooled by this brief rebound; it is like a 'paper tank,' appearing strong but actually weak. Because the expectation of a Federal Reserve interest rate cut hangs over the dollar like a dark cloud, and with Trump constantly 'ranting,' it's incredibly difficult for the dollar to make a true comeback.
Let's talk about the Federal Reserve's interest rate cut in September, which has almost become a 'death knell' for the dollar. Deutsche Bank is betting directly that an interest rate cut is certain! Currently, the market expects a probability of over 70% for a rate cut. Although Powell says he wants to see the data, his actual actions are quite honest. With slowing inflation and cooling employment, all signs indicate that a rate cut is a done deal. The Federal Reserve is like a 'bad boyfriend,' saying 'let's think about it,' while actually having prepared the interest rate cut PPT. The dollar's rebound is merely the last hearty meal before the 'execution,' seemingly abundant but in reality fleeting.
Trump's crazy comments have made things worse for the dollar. Recently, Trump has been firing on all cylinders, saying, 'Powell should be fired! Although he has no legal right to do so,' and 'Not cutting interest rates is treason!' This political firepower combined with expectations of interest rate cuts has delivered a double blow to the dollar. Even if the dollar rebounds, it’s like a 'three-legged race,' it won't go far at all.
So, in the face of such a situation, what should traders do? Chang'an offers you three pieces of advice. Short-term players should remember that the dollar's rebound is a 'tail event,' take a bite and run, absolutely avoid getting stuck in a battle, or it will be easy to get 'choked.' Long-term investors should be clear that during a rate cut cycle, the dollar is the younger brother, while gold, bitcoin, and non-US currencies are the favored children; holding onto these 'favored children' will help you walk more steadily on the investment path. As for the onlookers, just grab a small stool and watch the 'palace drama' between Trump and Powell; it’s much more exciting than trading coins, and you might even learn a lot from it.
The recent rebound of the dollar is like a 'dead cat bounce' in the crypto market; no matter how high it jumps, it will eventually fall back down. When the interest rate cut in September comes, let's not forget the advice from Big H: Don't go against the Federal Reserve, and definitely don't trust Trump's words. In the world of investment, all myths of getting rich quickly begin with a respect for risk. To gain something in this opportunity and risk-filled crypto market, one must always stay vigilant and pay attention to market dynamics.
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