10xResearch: A Positive Signal for Bitcoin? Gold Hits Record Highs!

10xResearch2024/08/01 09:51

By:Markus Thielen

Institutional Crypto Research Written by Experts

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👇1-10) While the Fed's statement maintained flexibility and did not explicitly signal a September rate cut, Chair Powell's comments during the subsequent QA session hinted at the possibility, contingent on expected declines in inflation.

👇2-10) Previously, Powell indicated that the Fed would only commence rate cuts when there was sufficient clarity for multiple reductions. If the Fed proceeds with a cut in September, several additional cuts are likely to follow, providing substantial stimulus for financial markets, provided the economy remains stable.

👇3-10) The upcoming inflation report on August 14 is anticipated to show inflation falling below 3.0%, according to our model. We are entering a period from August to October when year-on-year inflation comparisons are expected to be favorable.

Bitcoin vs. Gold → Gold making new all-time highs… Bitcoin to follow?

👇4-10) Gold often delivers strong risk-adjusted returns when the Federal Reserve begins a rate-cutting cycle. As Bitcoin is considered digital gold, its prices should similarly benefit. However, the market might take more time to reflect this.

👇5-10) Although tech stocks rallied before and after Powell’s press conference, Bitcoin experienced a sudden sell-off during the final hour of July's trading session. This typically indicates an institutional investor rebalancing their portfolio. Bitcoin dropped 3% quickly, but this temporary sell-off should not be overemphasized.

👇6-10) Traders quickly sought explanations, with some attributing it to Trump's diminishing election prospects and Kamala Harris gaining points in surveys. However, these arguments should be taken with a grain of salt.

👇7-10) Contributing factors could include the presence of Mt. Gox creditors, temporarily pushing Bitcoin prices lower, and the historically weak Bitcoin seasonals in August and September when prices remain flat.

👇8-10) In early July, the crypto markets experienced significant turbulence due to uncertainties surrounding listing and delisting announcements in South Korea. This volatility was compounded by the Financial Supervisory Service's (FSS) announcement of a new system for continuously monitoring suspicious cryptocurrency transactions, scheduled to go live on July 19, 2024.

👇9-10) Additionally, discussions about potentially delaying the implementation of a 20% tax on crypto gains until 2028 further contributed to market instability. By July 8, Bitcoin had dropped 13% during Asian trading hours, although prices recovered during European and American trading sessions.

👇10-10) The chart illustrates that flows in Asia primarily drove the early July sell-off, while European and US-based investors engaged in profit-taking towards the end of the month. This profit-taking is likely due to month-end rebalancing, as evidenced by the 3% sell-off in the final trading hour following Powell’s speech. Therefore, the sell-off appears to be temporary. A new month awaits…

Bitcoin performance during various trading hours (last 30 days)

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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