CAN THIS BE THE BOTTOM? BITCOIN, CRYPTO, STOCK MARKET UPDATE!!!
The fed minutes from the last meeting were released today and obviously the minutes just said what we already knew based on the meeting um and testimony that powell gave after the meeting and then following the fed board. Members spoke all last week and powell spoke again reiterating that they see more restrictive policy likely if inflation fails to come down. So it all hinges on the inflation print that were looking for next week on the 13th. If it comes out hot, the fed is going to raise 75 basis points they would. They have already telegraphed that move. They will continue to reinform that move reaffirm that move. They said likely in july. They would see another 50 to 75, depending on you know, or potentially one uh percentage, point 100 basis points or one percentage point in discussing potential policy actions at upcoming meetings. Participants continue to anticipate that ongoing increases in the target range for fed funds rate would be appropriate to achieve the committees objectives which their objective is to bring down inflation. So right now thats what the markets are looking for is for inflation to come out hot again and for the feds response and markets are just kind of consolidating sideways. In anticipation of that move, bond meal bond yields are up a little bit um. You know, after those minutes were released, theyre trending a little bit higher, and you know the market pros track the spread between longer duration, treasury yields and short duration, treasury yields with the former typically higher.
So you know the 10 year is usually higher than the two year when the two year goes higher than the 10 year. That is what the yield curve inversion is all about, so the treasury yields pushed higher after the release of the fed meeting minutes, because the documents showed that the central bank was leaning towards another 75 point basis rate hike to get inflation under control the 10 year Treasury yield tends to peak near the peak fed funds rate of a given cycle. Market expectations point to a 3.3 terminal rate, which is consistent with the peak in the 10 year yields to date, however, softening growth and inflation expectations suggest the 10 year yield near 3. Has limited upside and may actually decline in the second half of the year, which obviously is going to keep pressure on the housing market? Because if rates go up in treasuries, then mortgage interest rates go up and that brings prices down and inventory levels up in the housing market, as reported earlier today, mortgage applications were way way down again from last month because of rising interest rates, even though the interest Rates came down just a little bit the other day. The mortgage applications are still down because rates are, you know, still twice as much as they were at their lows, so thats whats kind of going on there. As far as news, a lot of people have been asking about voyager and you know the bankruptcy and whats going on with voyager and they are entering chapter 11 bankruptcy.
So this you know we dont know where this is going to stand. Well, just have to watch day by day to see what happens and what the results of the bankruptcy are. But you know typically, when something goes into receivership, in a bankruptcy either have immediate liquidation, which they get, what they can get when they liquidate the assets or it could be tied up for years in a bankruptcy. Proceeding and generally the creditors are the first ones in line, and investors are usually some of the last ones to receive anything if they receive anything at all. So well just have to wait and see how that kind of develops. Also celsius is kind of reorganizing. They paid down some debt to reduce their liquidation to free up bitcoin, so the thinking is theyre going to liquidate the bitcoin uh in order to pay off other creditors and other debts, and they have put some debt restructuring bankruptcy advisors on their board. So well just have to watch and see how these things unfold. What kind of pressure that continues to put on the market so lets take a look at bitcoin. This is bitcoin leveling down, as we you know, have been watching over the last few days. This is bitcoin on the hourly lets, take a look at the daily here and again, just kind of consolidating sideways. Of course, this range here looks a lot like this range here before that last drop so um, the question is, you know, could bitcoin be putting a bottom in here? Well, if the fed was going to ease up and inflation was under control, we could really expect a bottom to be put in uh for bitcoin and for the stock markets, but whats happening right now is markets are kind of ranging waiting for that inflation print? You know could be up and down on any given day, depending on what happens over the next week until we get the inflation report.
If inflation comes out hot markets, will you know trend down waiting for the fed, meaning the fed? Does its thing based on what it telegraphs and markets will bounce just like theyve, been doing on that news and then continue to either range depending on where things are at that point or trend, you know range and trend kind of sideways, you know, or potentially, if Thats a bottom it could consolidate for a while and then start. You know looking for the next leg up, but the real question is you know like for bitcoin and for crypto uh heres ethereum on the daily. You know kind of doing the same thing, just really unwinding. You know theres a lot of different on chain metrics. We looked at the other day, theyre kind of pointing to a bottom right here. Some of them are saying you know pointing towards a little bit more downside before a bottom, so somewhere in that 14 and a half 12 and a half to 14 and a half range ultimately um, you know the question is: could this be a bottom right here? You know potentially, and one of the thinking is you know if recession is a concern, will the fed ease up or even reverse, to avoid a recession? Well, you know what the fed has to do is they have to get inflation down? They re reiterated it multiple times in the meeting after the meeting and now with the release of the minutes and theyre going to continue on that path, because they have got to get inflation under control, they have to get it down.
Basically, they have to cut it. Half from where it is the only way to do that is to destroy demand the softest land and landing that theyre talking about. Is this right here, ranging down you know in the markets? Is that soft ish landing versus a crash? So you know the fed has to destroy demand. They want to destroy demand. They want americans to feel less wealthy, meaning destroying values and house prices, destroying asset prices in a controlled leveled down manner, right so level after level after level, bringing asset prices down, bringing housing prices down, bringing asset prices down in the markets and in bitcoin and crypto. So that people will feel less wealthy theyll spend less money which eases pressure up on the economy, so thats kind of whats going on there in terms of the fed. What they have to do to bring inflation down is they have to destroy demand, so people spend less money, so manufacturers stop producing what theyre trying to avoid is a deep recession where you get mass layoffs, companies closing going out of business. Things like that, which you know happened during the pandemic, that was a forced shutdown that was a panic, capitulation right there. What were seeing here is a steady unwinding of the markets. Now the real question is, you know, can you know we avoid a deep recession and so far so good right? The labor market is still pretty healthy, theres. You know twice as many jobs.
You know the report today was: there are twice as many jobs as there are people looking for work based on the labor report. Today, the job market is still red hot. Despite recession, fears, as the great resignation continues, so people are still feeling. Okay, theres still plenty of jobs out there, so we dont have to worry about a deployment issue, so it looks like the fed still has plenty of runway to go to bring these rates down and get this inflation down. Uh to you know, to keep rates going up, to bring inflation down so to think that theyre going to pivot or change course anytime soon or that inflation is going to be under control anytime soon. You know just isnt the realistic likelihood and probability. So what the fed has to do is they have to continue to destroy demand, continue to fight inflation, get that down, and then maybe they can reverse course. You know next year now mid. You know first second, third quarter well just have to see. The other thing is the thinking that everything is priced in right. Recession is priced in recession, cant be priced in because what recession is is massive job loss companies closing uh companies. Uh now are reporting earnings this week, so were waiting on earnings. The markets are kind of ranging waiting on earnings, so once we see earnings come out, then well have an understanding of where companies are in terms of their current earnings and what the guidance is looking forward and thats how recession gets priced in is based on earnings Reports and then guidance going forward so right now they havent reported so the markets cant price, that in because they dont know what to expect and again.
You know its just level after level kind of like weve been seeing here. So this price action looks a lot like this price action here, where you know uh, the next leg down is being prepared uh. If this were a bottom, then you know a lot of people are looking for an immediate reversal. You know you could get a nice little bounce here into the 23 24 000 range. But you know between now and next week, but whats more likely is that whatever is done will be undone, you know and ready for the next move down. Unless you know uh, somehow, bitcoin and crypto can kind of hang on right here, but theres. You know more contagion in the space out there, theres more miners that are going to need to sell now, theres theres a lot more things going on behind the scenes that we dont even know about. Yet that are going to pop up so well just have to wait and see how things unfold over the next week keep an eye on the inflation report, the fed response and receive recession, mary fears and effects on companies in earnings as they come out.