The Fed Will Be Strong Again

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2023-01-18 18:41:41

Market situation

In the second session of the week, US stocks fell. The Dow Jones fell 0.39%, the S&P 500 fell 0.75% and the Nasdaq fell 1.03%. The futures market has a slight uptrend. Gold and oil traded at the price of 1634 USD/ounce and 86 USD/barrel, respectively.

But overall the market came back strong in October. The Dow was up 13.95% for the month. 30 stocks ended their best month since 1976 as investors turned to more traditional companies, like banks, to lead the next rally. The S&P and Nasdaq are up about 8% and 3.9%, respectively, in October.

Bitcoin is still around $20,500. The crypto market is up slightly and the capitalization is over 1 trillion USD.

Ahead of the upcoming Fed meeting, some companies continue to make mixed interest rate predictions. Goldman Sachs thinks the Fed’s tone with its estimates will be worse, but the trend is still gradually reducing the increase for interest rates to seep into the market. Goldman Sachs economists say they now expect the Fed to raise rates to 5%, up from 4.75% previously forecast. The new growth path according to this bank will be to increase 0.75% this week, 0.5% in December and 0.25% in February and March.

The world’s largest investment firm, Blackrock, made similar comments. According to BlackRock, the stock has yet to fully reflect recession risk and earnings. Therefore, the company’s analysts predict that central banks will only stop tightening monetary policy when the damage is more obvious. They also say interest rates have hit a level that causes a recession.

All these information made US stocks have a decline at the beginning of the week. FedWatch futures still show, most investors think the Fed will continue to increase 0.75% at this week’s meeting.

Real estate market slows down

Rising interest rates continue to have a more pronounced effect on the US real estate market. It causes buyers to reduce demand because the amount they can borrow is less. Homebuilders say 2023 will make the market downturn even stronger as high interest rates scare away buyers.

According to the US Census Bureau, a 17% drop in building permits indicates a decrease in the amount of future construction work. PulteGroup, one of the nation’s largest homebuilders, reported that the rate of customer construction contract cancellations increased from 15% in the second quarter of this year to 24% in the third quarter.

The US real estate situation has cooled down as in newer reports. Not only house prices, rents, and home sales fell, but home construction also went down sharply with the same trend.

Although inflation is at a very high level, the European Central Bank continues to keep interest rates low and not as aggressive as the Fed. Preliminary data from the European statistics office shows inflation in the region at 10.7% a year this month. This is the highest monthly inflation rate since the formation of the euro area. The 19-member bloc has faced higher prices, especially in energy and food, over the past 12 months. The euro remains very low against the dollar and the DXY index remains high.

BTC is the best chance we have

October 31, 2008 was the first day the Bitcoin Whitepaper was officially published by Satoshi Nakamoto. Over the past 14 years, Bitcoin has transformed from a pastime into a globally recognized brand. On this anniversary, we take a look back at where Bitcoin has achieved certain successes over a not-so-long period of time for an asset.

Bitcoin from its early days to now has undergone many challenges both internally and externally. BTC has experienced conflict and hard fork twice when it split with Bitcoin Cash and Bitcoin SV. Or obstacles from the market, legal, government, … but BTC is still growing stronger and still leading the crypto market in terms of capitalization until now.

As can be seen, Bitcoin is no one at the top but it is by far the most powerful project in the crypto market. BTC is open source, it can be copied by others, but community trust is what makes BTC exist and grow. This is a non-copyable element. All of the BTC community has played a small part in this huge development.

Although some argue that today’s development of BTC is not exactly the same as the whitepaper, Satoshi himself has said that whichever version is most accepted by the community is the version he wants to work towards.

Unlike many people who think Bitcoin is version 1.0, the MySpace of social networks, the AOL of the Internet… The truth is that Satoshi built Bitcoin based on decades of history of many researches and projects.

Interestingly, the whitepaper does not mention the total supply limit of BTC. But it is Bitcoin’s halving mechanism that ultimately determines the total amount of BTC mined. That is, after every 210,000 blocks are mined, the number of BTC mined in each block will then be halved. This results in only about 21 million BTC. This is the magic of math.

One of the big milestones of Bitcoin was being accepted as legal tender in the world’s first countries like El Salvador and the Central African Republic. Sending Bitcoins without any third party is still guaranteed. It is used by freedom fighters and campaigners, and as a tool for financial liberation and economic empowerment worldwide.

Although Bitcoin still has disadvantages such as slower processing speed compared to many other cryptocurrencies, or high transaction fees when congested. But that does not mean that Bitcoin loses its value. BTC remains the best opportunity so far for us to have a decentralized currency, not regulated by any third party or government.

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#Fed #Strong

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