{"id":492959,"date":"2022-06-14T05:47:58","date_gmt":"2022-06-14T05:47:58","guid":{"rendered":"https:\/\/ktsl888.com\/?p=492959"},"modified":"2024-06-11T13:12:06","modified_gmt":"2024-06-11T13:12:06","slug":"the-bitcoin-swing-set-possible-outcomes-of-a-dovish-vs-hawkish-fed","status":"publish","type":"post","link":"https:\/\/ktsl888.com\/news\/the-bitcoin-swing-set-possible-outcomes-of-a-dovish-vs-hawkish-fed\/","title":{"rendered":"The Bitcoin Swing Set: Possible Outcomes Of A Dovish Vs Hawkish Fed"},"content":{"rendered":"

Bitcoin shed over 15% in the last 24 hours to around $21k and the whole crypto market sank below $1 trillion on Monday.\u00a0Whether this gloomy start of the week will be followed by even more downside or some relief, could depend on next week\u2019s meeting of the US Federal Reserve (FED).<\/p>\n

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Bitcoin trading at around $21k in the daily chart | BTCUSD on TradingView.com<\/figcaption><\/figure>\n

Related Reading |\u00a0Crypto Markets Lose $100 Billion As Bitcoin Drops Below $26K \u2013 More Pain Ahead?<\/a><\/i><\/b><\/p>\n

Dovish Or Hawkish?<\/h2>\n

The US is seeing the largest year-on-year increase of the Consumer Price Index since December 1981. Inflation has not been “flattening out” as Fed Chair Jerome Powell expected in May.<\/p>\n

Many analysts think this calls for a hawkish Fed and have predicted the next interest raise hike to be higher than previously announced. But others think that the Fed is not likely to surprise investors with a higher hike, so a hawkish scenario is still doubtful.<\/p>\n

Nevertheless, the fear of recession is here and so is the bear market.<\/p>\n

JPMorgan Chase & Co. strategist Marko Kolanovic explained in a note shared by Bloomberg why the next move could remain dovish:<\/p>\n

\u201cFriday\u2019s strong CPI print that led to a surge in yields, along with the sell-off in crypto over the weekend, are weighing on investor sentiment and driving the market lower… However, we believe rates market repricing went too far and the Fed will surprise dovishly relative to what is now priced into the curve.\u201d<\/p><\/blockquote>\n

But JPMorgan economist Michael Feroli thinks the opposite and expects a 75bps increase.<\/p>\n

Meanwhile, Guy LeBas explained<\/a> the mechanics of what happens at an FOMC meeting, stating that “Most of the time there are two realistic choices–“A” and “B”–but in times of extraordinary change or volatility, there are sometimes more. Incidentally, archived teal books are available here for the curious.”<\/p>\n

“I am willing to bet that Option A is a 50bps rate hike with hawkish guidance for a faster pace of hikes thereafter. Option B is a 75bps hike with neutral guidance. Option C, if it’s serious, probably includes a faster pace of balance sheet runoff.”<\/p><\/blockquote>\n

LeBas took into account a WSJ article<\/a> that also claimed the “troubling inflation reports” could lead to a surprise 75bps interest rate hike by the Fed.<\/p>\n

The WSJ article quotes “Two consumer surveys have also shown households\u2019 expectations of future inflation have increased in recent days,” previous statements by Fed Chairman Jerome Powell, and the analysis of several Wall Street forecasters.<\/p>\n

On one hand, Powell had said: \u201cWhat we need to see is clear and convincing evidence that inflation pressures are abating and inflation is coming down. And if we don\u2019t see that, then we\u2019ll have to consider moving more aggressively.\u201d This could paint a\u00a0 0.75bps scenario if we take into account the inflation reports.<\/p>\n

Nevertheless, LeBas thinks that “Option A and B are both good possibilities for June. I lean towards A (hawkish 50) as most probable.”<\/p>\n

\n

50 basis points is only \u201cHawkish\u201d if this is a hawk: pic.twitter.com\/eyZzuXVzyv<\/a><\/p>\n

— Graham Sanders (@geswolfcrest) June 13, 2022<\/a><\/p><\/blockquote>\n