Bitcoin is about to close the best month of January since 2013, in the wake of investor speculation, who bet on a less hawkish Fed on rates and on the beginning of a new chapter for the world of cryptocurrencies, gripped in 2022 by various crises and by the crash of the Sam Bankman-Friedman FTX platform.
There is also a psychological component – as always, on the other hand – which justifies the powerful recovery of the number one cryptocurrency in the world, taken since the beginning of 2023 by more than 40%.
To explain it is Noelle Acheson, autrice della newsletter Crypto is Macro Now.
Acheson points out that Jan “it gives the impression of being the month of a new beginning, characterized by greater clarity on bankruptcy procedures (related to the crypto world)” in the face of “market fundamentals that indicate that the worst is behind us”.
But is it really so?
The Bitcoin rally, as well as the Nasdaq rally – flown since early 2023 by more than 11% – and the rally of some tech stocks – what about Tesla’s incredible comeback, Stock Flown Over 40% YTD ? – are closely linked to the return of investors’ appetite for risk, after the maxi retreat of 2022.
However, this return depends strictly on expectations of what central banks will do in the first place Jerome Powell’s Fed.
The latest data on US inflation have confirmed this the easing of upward pressure on prices: from here to say that Jerome Powell & Co are even ready to cut rates there goes, and not a little.
Clearer signals will come with the announcement of rate hikes that the FOMC, the monetary policy arm of the Federal Reserve, will do the day after tomorrow, following a two-day meeting starting tomorrow, Jan. 31.
Are Powell & Co really ready for the dovish or at least less hawkish turn?
Some factors say the opposite: perhaps we will no longer see announcements of monetary tightening of 75 basis points, but this does not exclude that US fed rates can be left at higher levels, among other things for a longer period of time ; and that, therefore, rate cuts are confined to the world of vain hopes, at least for now.
Da hedge fund scommessa bearish record contro futures Treasuries
A warning to this effect has arrived in the last few hours from the data released by the Commodity Futures Trading Commission, from which it emerged that, on 24 June, the hedge fund industry has launched the largest bearish bet in history de futuresi bond Usa.
The news, reported by Bloomberg, raises new doubts about the imminent end of a hawkish Fed on rates. In numbers, the aggregate parameter it measures accumulated net non-trading short positions across all Treasury maturities, it reached a record 2.4 million contracts, confirming that the wager of a U.S. central bank about-face is probably not only premature but also wrong.
Precisely these expectations have triggered a buy boom on US Treasuries in this month of January, now nearing its end, which has led the bond index compiled by Bloomberg to rise by 2.3% since the beginning of January, after plunging 12.5% in 2022.
But now hedge funds’ short bet against US Treasuries futures fuels the suspicion that the Treasury rally itself is bound to prove to be a short-lived phenomenon.
In the last meeting of 2022, the FOMC raised rates by 50 bp, bringing them within the range between 4.25% and 4.5% and slowing down the pace of rate hikes after four consecutive 75 bp tightenings.
The latest projections by monetary policy makers – contained in the dot plot – point to rates rising more than 5% this year, level at which they should remain until 2024.
For the day after tomorrow Wednesday February 1st the markets are betting on a monetary tightening of 25 basis points.
In this context, despite the various fears and rumors, there is no shortage of supporters of Bitcoin.
It is the case of Rick Bensignor di Bensignor Investment Strategies, who believes that the Bitcoin by now is ready to test the $25,000 level again, the level it last touched in August.
Currently, the prices of the world‘s number one cryptocurrency hover around $23,250, with investors betting on the entire crypto world to recover.
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