The Atlanta Fed's forecast for the U.S. GDP in the first quarter of this year is -2.82%. Historically, when GDP announcements turn negative, the price fluctuations of Bitcoin in the short term are as follows:
The first GDP decline of 5.3% was announced after the Fed had already lowered rates in advance (purple line). At that time, Bitcoin initially dropped by 40% and found its bottom after the announcement, subsequently entering a significant bull market, with prices climbing to 60000 USD.
The second GDP decline of 2% occurred before the announcement, as interest rates were close to 0%, and the Fed had no leverage available. Moreover, after the GDP announcement, interest rates were raised. Therefore, Bitcoin continued to drop by 60% before stabilizing after the announcement.
The official first GDP estimate for this quarter will be released on April 30. As Atlanta has made a forecast over a month in advance, the market can react ahead of time. Additionally, the Fed has also lowered interest rates in advance, and rates remain high, providing enough leverage to cope with the ongoing need for further rate cuts.
This situation may resemble the first one, reacting before the GDP announcement on April 30 and starting to rise around the end of April.
However, since there is still some time until April 30 and the market has not fully reacted to the potential economic recession, there remains a risk of significant declines at any moment.
Fortunately, yesterday the U.S. stock market showed signs of a temporary bottoming out, and the current electronic trading is still rising.
The safe-haven asset, the Japanese yen, also experienced a temporary pause in its rise.
Next, there is a possibility that Bitcoin ETFs may end their consecutive outflows in the short term.
If the U.S. stocks can continue to rebound to the neckline, there is still about 6% to 7% room for upward movement. Bitcoin reacts approximately twice, around 12% to 14%. Based on the current prices of 82000 to 83000, Bitcoin is likely to first rebound to around 95000.
Therefore, if one wants to seize this short-term rebound, the capital allocation should not be too high. When the market recovers to around 95000, exit in a timely manner, and switch to shorting. When U.S. tech stocks drop again to around 16000, re-enter to position for Bitcoin. (Based on a twofold decline calculation, Bitcoin may again test around 68000 after rebounding to 95000).
# Market analysis is for reference only # It does not constitute investment advice