The interest rate hike in July is 75 basis points, and as far as I can remember, the market didn’t dump as much. The only explanation for that is the market has already “priced in,” which indicates that market participants are always one step ahead of the news; Investing is speculation! With the Fed fund rate at 2.5% right now, the real interest rate is around -5.5%.
[source: longtermtrends.net]
I am aware that the real interest rate is not healthy at all, despite all of the efforts being made to combat inflation. Apparently, the inflation peaked at 8.5% and shows signs of going down. But still, Imagine 5% of your savings in the bank is gone every year for no good reason. Perhaps, this is why in the recent FOMC minutes, the Fed hinted that they would continue to fight inflation by doubling the rate to contraction of Fed balance sheet. Obviously, they are not saying this because of the upcoming midterm election.
The market took a dump these two days as the Fed signaled to become more hawkish. Commodities like silver and Cryptocurrency can’t escape the hawkish stance. ETH just dropped to a major support, and silver is barely hanging above the support.
So when pivot? I really have no idea. Call me a conspiracy theorist, but I think at some point, the Fed must pivot; we simply don’t know when. Why? Because the U.S. financial system simply can’t function properly without loose credits available, they need to support growth; otherwise, the worse could happen, which is deflation.
Amid the looming threat of more rate hikes, I bought the fucking dip! I know this is crazy, but I bought more ETH at around $1700 and placed my limit order of silver at around $18.5 (PSLV $6.4). I have been DCAing ETH Since it dropped to around $1,000 at that time. But now, I have decided to abruptly increase my ETH position size. I know this is a bold move, but the Fed can’t keep rising the rate forever.
One thing I found out about trading is that technical analysis (to be specific, the price action analysis) is incredibly useful for determining the buy zone regardless of the macro and fundamental. Fundamental tells me to buy ETH and silver, and TA tells me the entry price. I’m just glad that I didn’t buy ETH at $2000 a few days ago. But who knows, maybe the Fed is crazy serious about hiking the rate till next year;3-digits ETH, here we go again! If that’s the case, I hope I still have fiat left to keep buying the dip.
Please take this post with a grain of salt and no financial advice juice; catching the falling knives is extremely dangerous.
