Original author: DD1's Crypto Thinking
Source: PANews
According to the previous research on the relationship between bits and the Nasdaq, the price trend of bits is very correlated with the Nasdaq index of U.S. stocks, which is an amplifier of the Nasdaq fluctuations, and the current Nasdaq has fallen by 8.5% from its high (currently falling to MA120, while the previous bit fell from a high of 7.4w to a low of 18%) Referring to the historical trend relationship between the Nasdaq and MA120, the probability of the Nasdaq falling again is small, corresponding to the bit, unless there is an extreme black swan in the field, or the Nasdaq continues to fall due to the impact of the first quarter earnings announcement of US technology stocks this week, the possibility of a sharp fall is small, and it may cooperate with the Nasdaq rebound and then make a direction choice.
(20231130, the relationship between bits and the Nasdaq)
(20240422, the relationship between the NASDAQ trend and MA120)
Powell continued his hawkish speech on the 17th last week, maintaining his "caution" on future interest rate cuts At the same time, the Federal Reserve's Beige Book shows that U.S. consumer spending has barely increased, and the overall price increase is stable, and it is generally moderate, and U.S. inflation is expected to maintain a slow pace in the future, which is far from the previous PCE indicator and CPI indicator.
(20240418, the New York Fed "previewed" the withdrawal of QT roadmap: the Fed may stop shrinking its balance sheet next year)
It is impossible to continue raising interest rates, and the closer the Fed gets to cutting rates, the more hawkish it will be. Expectations of interest rate cuts are affected by data and the external environment, which is very slippery. At present, my view on the medium-term tightening of liquidity in the United States remains unchanged, and for the United States, the intuitive observation of future liquidity is the decline in bank reserves and the change in the balance of the US Treasury from rising to falling due to tax payments (i.e., the change in liquidity in the medium-term balance sheet reduction).
(20240422, the structure of the Fed's debt)
At present, the scale of balance sheet reduction is 95 billion / month, and the Fed's balance sheet reduction scale will be reduced by 30 billion per month from May, that is, about 65 billion / month, until the beginning of next year or the middle of the year, the Fed plans to reduce bank reserves from the current 3.5 trillion to 2.5-3 trillion range.
(20240409, Xiaohei Xinwen's views on the liquidity of the market outlook)
Xiao Hei's 20240409's new article "Heatwave" mainly talks about three things.
1. Explanation of BTFP and near-term liquidity. It mainly explains that after the termination of the BTFP, the Federal Reserve has recently injected liquidity into the market by changing the collateral rules of the discount window. The Fed has eased bank capital requirements and will exempt UST (Deposit Capital, used for bond purchases) from SLR (Supplemental Leverage) for covert money printing. As long as government bond yields do not rise above nominal GDP growth (with negative real interest rates), most financial asset prices will continue to rise.
2. Another way to determine the source of liquidity comes from the amount of tax paid on the due date of the 2023 tax year for the period 20240415-20240501 + the speed of quantitative tightening QT + the balance of TGA. Paying taxes has reduced liquidity to a certain extent, but this recent reduction in liquidity will go into the TGA, or the balance of the Ministry of Finance's account in the future, which is currently about 750 billion US dollars, and the slowdown in QT (30 billion US dollars per month since May) will provide a guarantee for liquidity during the year. The period of instability of risk assets is 20240415-20240501, and after 20240501, liquidity will gradually become better.
3. The halving of bits (20240420) tends to be bullish, but at present, the liquidity of the US dollar is tighter, and the resulting hedging lure effect will be more intense.
According to Xiao Hei, considering that the current Ministry of Finance 20240415-20240501 due to the increase in the amount of taxes, the liquidity reduced by bank reserves will be supplemented by the balance of the Ministry of Finance TGA, that is, the source of liquidity for Yellen to stimulate the economy, before paying taxes, the amount of TGA is about 750 billion, and then it will probably rise to above 1 trillion, and the reduction of the TGA balance and the overnight reverse repurchase scale ON RRP will bring at least 1 trillion liquidity to the market in the second half of the year.
I will also talk about my opinion, which is different from Xiao Hei's view, compared with the trend of bank deposit reserves and historical stock price trends, when bank deposit reserves enter a downward trend, the performance of the cryptocurrency market is often not very good, and it may even be the beginning of a bear market, such as 14-16 years, 18-19 years, 22-23 years (but 16-17 years are the opposite, I think there is a stimulus effect on the demand side after the bulk crash), the role of bank deposit reserves is more important than the scale of overnight reverse repo and the balance of the Ministry of Finance, which is a direct source of liquidity on the demand side of lending, and the balance of the Ministry of Finance account should release liquidity for the marketNot to mention whether the reduction in reserve requirements can be fully compensated, it is questionable how much share of the market can flow into the market, given the government's hard spending on other areas.
Therefore, taking into account the background of the medium- and long-term decline in bank reserves, combined with the support of the Nasdaq near MA120, this round of the market since 6w will be regarded as a rebound at the macro level, and the goal of the rebound is not necessarily, while walking, 67000 is the strength and weakness of the current shock range, and the bit stands firm in MA21, and there may be a new high after this position, and you can synchronize the right trend of the Nasdaq to make plans.
The difference with Xiaohei's medium-term view does not affect the operation of our short-term test position, but affects the position of the lower medium and long-term pending orders and the time control of the short to long term, and affects the current short-term position size and the requirements for risk control (for example, the expected profit of the copycat position on the left side of the recent bit 6w may be reduced, and the setting of the original price stop loss after maintaining a certain profit, etc.).
(20240422, US 10-year Treasury yield US10Y trend)
We can see that since the epidemic, when US10Y exceeds 2%, that is, from February 2022, and then the Federal Reserve officially raised interest rates in March, the market has already reacted before that, releasing water leads to inflation, and inflation needs to be solved by raising interest rates and shrinking the balance sheet, and now US10Y is making a comeback, rising to about 4.6%, far from the hard target of 2%, and 3% away The soft target is not near, so is it necessary to release liquidity and bring down the yield of government bonds by itself, as was the case in October and December last year? Unless the teacher is famous, it is unlikely that he will be able to do so in the short term.
The short-term decline of US10Y has boosted short-term liquidity, but the plunge of US10Y is most likely caused by black swans. Combined with the judgment of the above-mentioned bank deposit reserves, the short-term need to look again (do not go on leverage, do not think that there is a strong continuity), if the trend of October to December last year is replicated after May, perhaps this trillion or so liquidity can come to another wave of market, but to the middle line, this wave of rise I think the probability is a wave of temptation market.
The impossible triangle of demand, inflation and debt is the main contradiction affecting monetary policy at present, and the three influence and contain each other.