Technical Aspect
Bitcoin's cyclical trend.
Currently, the market lacks liquidity, and liquidity providers will only create fluctuations within limited liquidity.
Currently, the large Bitcoin appears to be in an upward flag pattern but has not yet broken through. Due to liquidity reasons, liquidity providers do not want to accelerate northward. From the Fibonacci retracement and extension lines, the large Bitcoin is currently at a short-term resistance of 0.768 around 85000. After a short-term northward move on Friday, it began to fluctuate. There has not been a clear upward movement from liquidity providers. Combined with the SKDJ, which has now reached an oversold value, the current fluctuation area is at a high level, with risks of falling again.
Macroeconomic Aspect
Important information report:
1. Federal Reserve Interest Rate Cut Events: The Federal Reserve is expected to cut rates by 25 basis points in June and September this year, while the previous forecast was just one cut in June.
2. The U.S. February PPI month-on-month rate recorded 0%, the smallest increase since July 2024. Short-term interest rate futures still indicate that the Federal Reserve will cut interest rates in June after the release of initial jobless claims and PPI data.
3. U.S. Treasury Secretary Yellen: (The weakening of the dollar) Many factors have already been reflected in prices, so seeing adjustments is quite natural. It is also natural for other currencies to perform well after a significant rise in the dollar.
4. According to CME's 'FedWatch': The probability of the Federal Reserve keeping interest rates unchanged in March is 98.0%, and the probability of a 25 basis point rate cut is 2.0%. The probability of maintaining the current interest rate unchanged by May is 79.9%, the cumulative probability of a 25 basis point rate cut is 19.8%, and the cumulative probability of a 50 basis point rate cut is 0.4%.
Now let's analyze the above economic information reports.
First, we need to understand what the core impact of interest rate cuts is. Reducing interest rates can lower loan interest, which is good for both individuals and businesses. This can encourage businesses to expand investments and individuals to increase consumption (such as buying houses, cars, etc.). In simple terms, interest rate cuts in the market provide more potential funds to enter.
Therefore, the reported interest rate cuts indicate that the Federal Reserve is unlikely to cut rates in March and may only start in June, which would be a significant negative for Bitcoin. If the news is released as predicted, liquidity providers in the market will continue to reduce liquidity, leading to a heavy blow to the market, which will decline again.
What data is related to interest rate cuts?
First U.S. Dollar Index
The U.S. Dollar Index has been weakening continuously, while gold keeps strengthening. The current administration is weakening the dollar through various policies, including tariffs and trade wars (this phenomenon could lead to economic outflow to other markets).
Second economic growth data.
GDP: GDP growth rate reflects the strength or weakness of a country's economy.
PMI: The PMI reflects the economic situation of the manufacturing and service industries. If the economy contracts, it may trigger interest rate cuts.
Inflation Data:
CPI (Consumer Price Index): CPI continues to be below a specific target, reflecting insufficient demand and deflation risks, which may trigger interest rate cuts.
PPI (Producer Price Index): Long-term negative growth of PPI reflects deflation in the industrial sector, with corporate profits under pressure, necessitating interest rate cuts and policy support.
Employment Data:
Unemployment Rate: When the unemployment rate rises (especially structural unemployment), it may trigger interest rate cuts to stimulate businesses to hire and improve employment.
Next, let's look at the recent data releases from the U.S.
Released on Wednesday.
The seasonally adjusted CPI year-on-year rate at the end of February is 2.8%, previously 3.00%.
The seasonally adjusted CPI month-on-month rate for February is 0.2%, previously 0.5%.
The seasonally adjusted core CPI month-on-month rate for February is 0.2%, previously 0.4%.
The seasonally adjusted core CPI year-on-year rate at the end of February is 3.1%, previously 3.30%.
This published data indicates that the market consumption index has declined, which simply means that everyone's consumption capacity is decreasing, and demand is insufficient, requiring interest rate cuts to alleviate. This also indirectly reflects that the Bitcoin market has no more liquidity and lacks new liquidity.
Released on Thursday.
The number of initial jobless claims in the U.S. for the week ending March 8 is 220,000, previously 222,000.
The U.S. February PPI year-on-year rate is 3.2%, previously 3.7%.
The U.S. February PPI month-on-month rate is 0%, previously 0.6%.
The unemployment claims data indicates a slight easing in the market compared to the previous period, while the PPI data continues to decline from the previous period, reflecting that corporate productivity is decreasing, indicating insufficient market demand and consumption levels not keeping up with production, thus putting pressure on corporate profits, necessitating interest rate cuts to alleviate. This also indirectly reflects that the Bitcoin market has no more liquidity and lacks new liquidity.
After analyzing all the above, we can see that the U.S. needs to cut rates, but the current situation creates uncertainty for the Bitcoin market, which may trigger panic funds. If the Federal Reserve announces a rate cut, the market will rise again; otherwise, it will decline.
Key point: Please pay attention to the Federal Reserve's interest rate decision on March 18-19, announced at 2 AM Beijing time on March 20.
After a deep analysis combining macroeconomic and technical aspects, it indicates that the market will continue to decline in a brief window period before rising again.
Do you think there will be an interest rate cut or not? Feel free to leave a message in the comments.
