Narrowing landings
Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
October’s late surge met an abrupt end as Fed Chair Jerome Powell hosed down rising hopes of a pivot to easing monetary policy in the short term. Having ended last month attempting to overcome $21k resistance, BTC now finds itself fighting to hold onto the $20k mark. Ethereum has similarly cooled off after breaching $1,6k, but has held firm above $1,5k support.
BTC:USD (1D, TradingView)
The pivot that wasn’t
By all metrics, the market seemed ready for the 75bps rate hike announced on Wednesday evening. Indeed, BTC and equities surged immediately following the print, spurred by the narrative that the Fed was poised to incrementally lower following hikes going into 2023. In a matter of minutes, bitcoin whiplashed from $20k to a hair below $21k.
Unfortunately for speculators, it appeared Powell caught wind of the pump (not really, but it sure felt like it). The chief policymaker’s speech following the release indicated that the Fed is in no way looking to ease, going as far as to warn that the body’s target interest rate could be higher than expected.
Harkening back to his days of calling inflation transitory, Powell has now admitted that the scope of the promised “soft landing” is narrowing significantly, as the US job market and risk-on assets remain stronger than anticipated. Even after nine months of rapid tightening, it seems there’s a lot more to be done.
Forward Focus
It brings me no joy to state that we once again find ourselves in search of a new narrative. With Uptober vanquished and hopes of a pivot shattered, markets currently find themselves in a no-man's-land of low liquidity characterized by hype-driven pumps.
For an example of the irrationality pervading the market at present, look no further than altcoin $MASK, which has seen exponential gains purely due to the fact that the ticker sounds similar to Doge evangelist and Twitter boss, Elon Musk.
As with any macro policy announcement, the immediate shock felt across sectors is likely to dissipate, as emotions run higher and attention spans contract further.
One immutable fact remains: BTC has yet to escape the trading range defined since June. While intraday volatility may bring FOMO to the fore as participants grow increasingly exhausted, conviction and positioning with macros in mind is a necessary safety measure.
