{"id":37493,"date":"2022-10-14T09:44:05","date_gmt":"2022-10-14T13:44:05","guid":{"rendered":"https:\/\/coinscreed.com\/staging\/?p=37493"},"modified":"2022-10-14T09:44:08","modified_gmt":"2022-10-14T13:44:08","slug":"bitcoin-not-expected-to-experience-rebound-after-short-squeeze","status":"publish","type":"post","link":"https:\/\/coinscreed.com\/staging\/bitcoin-not-expected-to-experience-rebound-after-short-squeeze\/","title":{"rendered":"Bitcoin Not Expected To Experience Rebound After Short Squeeze"},"content":{"rendered":"\n
After the U.S. CPI, Treasury yields<\/a> stayed high, which is a reality check for risky assets like cryptocurrencies.<\/h5>\n\n\n\n
\"Bitcoin
Bitcoin Not Expected To Experience Rebound After Short Squeeze<\/figcaption><\/figure>\n\n\n\n

Bitcoin (BTC) made a big comeback late Thursday, even though most people thought it would keep falling after the U.S. consumer price index (CPI) came in higher than expected.<\/p>\n\n\n\n

As a knee-jerk reaction to the news, the leading cryptocurrency fell to a four-month low of $18,140 on major exchanges. It then climbed all the way back to $19,500, just like how U.S. stocks<\/a> drop and then rise. A few hours before press time, prices came close to $20,000.<\/p>\n\n\n\n

The “rocket emojis” are back on Crypto Twitter, which is a sign of renewed bullish sentiment<\/a>, thanks to the unexpected rise in price after the data, which is thought to have been caused by the unwinding of shorts or other bearish trades.<\/p>\n\n\n\n

But people in the business world aren't sure if the overnight recovery will last.<\/p>\n\n\n\n

Ilan Solot, a Tagus Capital Multi-Strategy Fund partner, said, “I don't see any big changes in the world that would point to a sustainable recovery right now.” “Both the macroeconomic and geopolitical outlooks are still very bad, and there are no signs that the Fed will stop tightening in the near future.”<\/p>\n\n\n\n

The money markets now think that the Federal Reserve's (Fed) ongoing cycle of raising interest rates will peak near 5%. This is a big change from the end rate of 4.65%, which was priced before inflation data came out.<\/p>\n\n\n\n

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Markets have pushed up the estimate for the terminal rate to 4.9%. (Daily Shot, Wall Street Journal) (Daily Shot, Wall Street Journal)<\/figcaption><\/figure>\n\n\n\n

According to ING, Wells Fargo, and other investment banks, Thursday's inflation data confirms that the rate will go up by 0.75 percentage points on November 2.<\/p>\n\n\n\n

Analysts at CIBC said in a note to clients that “broad-based price increases in core service categories and still-strong labor market activity suggest that the Fed could front load rate hikes by more than was thought before at the FOMC<\/a> meeting in early November.”<\/p>\n\n\n\n

So, the rise in both stocks and bitcoin could be short-lived. This year, the Fed has raised interest rates by 300 basis points, but core inflation<\/a>, which doesn't include volatile items like food and energy, hit a 40-year high in September. But the so-called “tightening of liquidity” has hurt risky assets, such as cryptocurrencies.<\/p>\n\n\n\n

David Belle, the founder of Macrodesiac.com and U.K. growth director<\/a> at TradingView, said, “Buy the dip mentality remains ingrained.” This is because the Fed is now expected to raise rates more than it did before the CPI report.<\/p>\n\n\n\n

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The Fed is now expected to hike rates more than pre-CPI. (David Belle, CME) (CME, David Belle)<\/figcaption><\/figure>\n\n\n\n

In the last three months, buyers of dips haven't been able to make any money. This is because rising bond yields are a reality check for risky assets that are sometimes boosted by short covering or hopes of a Fed pivot.<\/p>\n\n\n\n

And bonds may do so again. The two-year U.S. Treasury note yield, which is sensitive to expectations of rate hikes, went up nearly 20 basis points to 4.48% after Thursday's CPI report and was still high at press time, around 4.43%.<\/p>\n\n\n\n

That's a sign that the bond market doesn't think the Fed's policy or inflation will change in a big way any time soon.<\/p>\n\n\n\n

In a daily market view, Michael Brown, head of market intelligence<\/a> at Caxton, said, “I still can't find a good reason to buy into this [equity market] weakness, and I have no plans to try to “catch a falling knife” any time soon.” He was referring to the rise in bond yields after the CPI report.<\/p>\n\n\n\n

“On the other hand, I still like the USD,” Brown said. The dollar index is one of the things that hurt bitcoin the most.<\/p>\n\n\n\n

Matthew Dibb, the COO and co-founder of Stack Funds said that bitcoin needs to break through higher levels of resistance to show that the trend has changed.<\/p>\n\n\n\n

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Bitcoin's daily chart shows a break above the 100-day SMA, and the Ichimoku cloud is needed to confirm a trend reversal. (TradingView) (TradingView)<\/figcaption><\/figure>\n\n\n\n

Since the middle of August, the bulls have been trying and failing over and over again to get above the 100-day simple moving average and the Ichimoku cloud.<\/p>\n\n\n\n

Katie Stockton, the founder and managing partner of Fairlead Strategies<\/a>, said in an email, “The daily cloud defines resistance.”<\/p>\n\n\n\n

So, it might be too soon to call a bottom while these levels of resistance are still in place. At press time, Bitcoin was traded for $19,590.<\/p>\n","protected":false},"excerpt":{"rendered":"

After the U.S. CPI, Treasury yields stayed high, which is a reality check for risky assets like cryptocurrencies. Bitcoin (BTC) made a big comeback late Thursday, even though most people thought it would keep falling after the U.S. consumer price index (CPI) came in higher than expected. As a knee-jerk reaction to the news, the […]<\/p>\n","protected":false},"author":39,"featured_media":37495,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[834],"tags":[9856,152,4581],"class_list":["post-37493","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-binance","tag-bear-market-2","tag-bitcoin","tag-twitter-pool"],"jetpack_featured_media_url":"https:\/\/coinscreed.com\/staging\/wp-content\/uploads\/2022\/10\/image-61.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts\/37493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/users\/39"}],"replies":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/comments?post=37493"}],"version-history":[{"count":0,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/posts\/37493\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/media\/37495"}],"wp:attachment":[{"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/media?parent=37493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/categories?post=37493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/coinscreed.com\/staging\/wp-json\/wp\/v2\/tags?post=37493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}