The CPI's aftermath doesn't seem to be over yet. The entire market is still in a volatile phase, but it's OK. It's Friday again. Let's just calm down for two days, especially since the September rate hike will be announced at 2:00 a.m. next Thursday. Although the market already expects 75 basis points, whether or not the expected gap will be maintained when the hammer hits the ground is unclear. The biggest sticking point at the moment is not just the rate hike, but the terminal rate. In particular, the 2022 Fed funds rate determines the total number of rate hikes remaining for up to three (including the October interim meeting, but with a low probability), from 3.5%, which Powell has said so far is almost impossible. Anything under 4% is enough. The 4% probability is quite high, which represents a 50-basis-point hike in November and a 25-basis-point hike in December, which is consistent with the mid-term election.
On current trends, while the euro zone is raising interest rates aggressively, the U.S. will not weaken, so the dollar index will remain fluctuating at a high of 109. Next week's rate hike will likely bring the dollar index back above its previous high. In turn, funds in risk markets will continue to decline, perhaps until October or after the mid-term elections as interest rates weaken and Europe's second, third, 75, will gradually weaken. The increase in the dollar index is what the Fed wants to see. The suppression of risk markets and the economy is also what the Fed thinks can be used as a weapon against inflation. Whether this weapon is a convenient one is uncertain. But the Fed has no better weapon than to raise interest rates and shrink its balance sheet. What the Fed can do is to increase interest rates further in the face of the rebound in core CPI. So the market macro sentiment is gradually decreasing, and the CPI for September remains pessimistic.
Especially for August CPI the most lethal of the housing price (rent) problems, although the price of wood did have a decline, because the mortgage/mortgage interest rate rise and the economic malaise actually housing prices are still high cost, can only by reducing demand to cool the housing price, this way to the rental market is still a long time, and this is not through the short-term problem of interest rate hikes.
In general, judging from current trends, September's CPI data may not be much better. It may be possible to keep falling, but even the magnitude of the decline is estimated to be even more pathetic. Even oil prices are better than August's month-on-month decline. That's why the economy is more pessimistic. Reversing this pessimism will largely depend on whether the Fed bumps in the face of the midterm elections, which has become the focus of the current market game.
Otherwise, don't say BTC and ETH now is the price of gold has been constantly declining, relative to the risk market, gold has been a certain degree of preservation, when the price of gold can not control falling, how can the virtual gold in the absence of favorable circumstances, especially the merger of ETH has been completed, then still need time to prove its value.
We can't change the situation, and it's hard to predict what's going to happen next, especially when sentiment is down, so we have to take a longer-term view of what might happen. Again, on the money front, the last two days of USDT's long lay-up, when its market value has increased by nearly $100 million, represent the beginning of money in Europe and Asia into the money market, where opportunities are increasing, if not yet.
USDC's market value shows no signs of stopping, which is also inextricably linked to the current macro mood in the United States, which has seen a large capital outflow on U.S. Treasuries, not to mention the stablecoins. As of 8:00 this morning, USDC's market value has dropped by another large amount, more than $550 million. And while BUSD's market value has recently increased dramatically, it has risen by less than $300 million over the same period.
The increase in USDT and BUSD funds was not enough to erase the overall decline in the value of the stablecoin, and more money fled the market. But there is still enough money left to push the BTC and the ETH to 2021 highs. The big problem is not a lack of capital, but the unwillingness of existing capital to go down, which is why new capital from the outside is so important that only the purchasing power of new capital weakens the wait-and-see attitude.
DAI's market value still reflects more of the ETH's collateral and spot leverage, and as the merger ends, the chain's lending to the ETH spot starts to return to normal, and DAI's market value can re-show the trend in the ETH spot price, from the data up to 8 a.m., DAI's market value is still in the state of a small downward fluctuation, as the ETH price drops, more chips are put off the circular arbitrage.
On the purchasing power side, we can see that the merger of ETH yesterday triggered large-scale buying of USDT and USDC, especially from the details of the data can be clearly seen, more money into the exchange is still in the merger before and after the period, especially after the merger. So from the fund data up to 8:00 this morning, we can see that the purchasing power of both USDT and USDC has increased significantly.
However, I have many friends who are expected to ask why prices will fall even though purchasing power has gone up and turnover is also increasing. This is because there is a bigger selling pressure. In fact, from the selling pressure data of BTC and ETH as of 8:00 this morning, it can be clearly seen that not only the buying power has not increased, but the selling pressure has decreased. This means that the decline in itself is not due to a large amount of chips. In particular, from the BTC and ETH into the detailed data of the exchange can be seen, in the last night, the exchange into the amount is actually very low, which proves that the drop is not because of the new into the selling pressure caused by the new, more should be in the stock exchange to rush to leave the place, in fact, yesterday's analysis we already know that many chips in order to prevent the ETH merger crash occurred, but into the exchange ahead of time.
And from the data can be clearly seen, up to 8:00 this morning, whether BTC or ETH from the exchange transfer cash withdrawal is greater than the transfer into the selling pressure, especially there is a large number of stored ETH transfer is more than 50% of the selling pressure, especially from the details of the data can be seen, in the process of ETH decline, there is still a strong chip outflow, which represents the improvement of buying sentiment.
However, both BTC and ETH still produced high inventory yesterday. Especially ETH was directly the highest value in nearly half a year. Although the merger didn't fall as expected, so some chips left the exchange one after another. But after the opening of the US stock market in the evening, the psychological shadow of the strike by US railway workers and the CPI iteration led to a relatively large drop in the US stock market.
However, the stock data of the exchanges show that the reason for the decline in prices is the departure of the "risk-off" chips stored on the exchanges, and the funds transferred to the exchanges are not the active upward buying, but the passive collection of lower chips at the lower prices. Therefore, even the increase in purchasing power and trading volume will do little to help the BTC and ETH prices rise, but only reduce the extent and speed of the decline.
Even emotionally, ETH, which had been out of the merger bubble for a while, was converted from a downward trend to a downward trend, and the BTC was slightly better. Especially now it's the weekend, and memories of May's two big declines are awakening, and panic may spread, with the focus on US stocks this evening. But for now, a sharp fall is unlikely.
And for ETH, with the completion of the merger, POW miners left the stage, the drop in throwing pressure is significant, even if the price cooling brought the reduction of 1559 destruction, but still can be seen that more ETH into the ranks of POS mining, at present, even if the unblock reward is only pledged APY still has 5% of the revenue, I believe that as the POS rules become more perfect, there will be more chips into.
As the BTC price dropped below $20,000, the relative miners were again close to the shutdown price, but the lower price did not allow the miners to sell or mortgage their chips. A large number of BTCs remained in the accounts, and historically, the miners' desire to sell dropped significantly after the shutdown price was reached, thus reducing the pressure on the market.
To sum up, currently affected by macro-sentiment, risk markets are indeed facing a more pessimistic state, which has caused further declines in BTC and ETH prices. Especially from the current trend of Nasdaq futures, it can only be regarded as having barely stopped falling, and even the trend of further declines can not be ruled out. All that remains is to see whether Europe's dominant trading timezone eases its downward trend in the afternoon. If not, it's still dangerous at night.
