Week in which we have known two important data to take into account. On the one hand, we have seen how the preliminary data would indicate that the US economy is entering a recession, after negative growth data for two consecutive quarters.
On the other hand, we have an overheated economy with high inflation, which has forced the Federal Reserve to take unprecedented measures for more than 18 years, with the 75bp hike in interest rates
Now the price of money in the USA is already 2.5%, but this will not end here
We can clearly see it in the Federal Reserve Dot Plot chart, where the consensus interest rate for 2023 is above 3.5%
The current scenario forecasts an even more important tightening of monetary policy
The Fed and crypto assets
Undoubtedly, it may be paradoxical that a completely decentralized payment method proposal independent of third parties is subject to this influence by a Central Bank, but that is the reality of the market with which we are working
The case of Bitcoin (and by extension that of the cryptoactive market), is very clear. In fact, we always present the BTCUSD chart marking the Federal Reserve meetings as important milestones and it is clear that the decisions made in the FOMC committee have their influence.
And it is that it is a situation that has its logic, beyond the concepts of design and conception of a payment network such as Bitcoin. In the end, all markets depend on one thing:
The balance between supply and demand
And here, liquidity plays a fundamental role. That liquidity that is being drained from the market at the moment, with the increase in the price of money by the central bank, and with the increase in the cost of products and services, which leads to having less disposable income for savings or investment
Not taking this aspect into account when understanding the functioning of the market, thinking that the technical characteristics of decentralized markets are sufficient to create an economic bubble, is radically misdiagnosing
The entry of institutional investment has created a deep and strong link between DeFi and TradFi, something that will be accentuated and increases the correlation between both markets
The market wakes up
In recent days we are seeing as a clearly highlighted fact the strong increase in the market of trading volume in the main assets. An always significant fact
Where we can see how, in the middle of the afternoon of the American session, we have turnover rates of over 12%, something completely unheard of
This is a clear indication that we are seeing signs of a possible bull market
Let’s not expect to see explicit signs of it, but what we are going to find are going to be these little signs that leave a trace of the current market sentiment
Ethereum is still the reference
We continue to see a market in which the asset that attracts all eyes is Ethereum. Without a doubt, it is the one that has the most novelties at this time with that important transition of the network’s operating model based on the changes in the consensus test
It seems that many unknowns have been cleared up in the case of the second cryptoactive in the market. We have seen a significant boost in its price in recent weeks, in which it had also received a severe punishment
This market movement is clearly reflected in the dominance, with a big push to the upside of Ethereum
Summer period… Now what?
We all know that the cryptoactive market does not rest… But humans do. It is clear that we are going to have trading in the market, but perhaps with less volume than usual.
That is something that will have to be taken into account at this time when we enter the month of August. What seems certain is that, both from a technical and business point of view, as well as from a market point of view, we are going to face a final quarter of the year that could be very promising in many aspects
But we must not forget as always… that it will be the market that will dictate sentence