Macro and crypto: What should traders and investors expect?
Hello, everyone! Today we would like to discuss macro and crypto, what affects that, what depends on that and what to expect from the market and when the new bull cycle will start
A LITTLE BIT OF THEORY
1. US PMI (Purchasing Managers Index) – macroeconomic indicator that shows the level of business activity.
2. DGS 1&5 – average 1 and 5 year US Treasury yield.
3. FED Funds Rate – the interest rate at which U.S. banks lend their excess reserves for short terms to other banks.
Let’s figure out what's GOOD and what's BAD for the crypto market
1. PMI
2. DGS 1/5
3. FED Funds Rate
Which market can be called BULLISH?
1. US PMI values above 50
2. Low DGS values 1/5
3. Low FED Funds Rate
That's the kind of market we had from April 2020 until November-December 2021. At that point, many realized that the music was no longer playing. The FED hammered the last nail in the coffin of the bull market in February-March 2022, and that's when all the fun and the official bear cycle began.
How do we know if the market has flipped and we're growing up again? Recommendations for PATIENT TRADERS
1. US PMI will come out of the crisis – current values are ATL from May 2020
2. The FED will do a soft landing, beat inflation and start lowering rates – very bullish signal. The important thing is to beat inflation, otherwise our bull market will be very short-lived, or the next bear market will be super painful.
3. DGS 1/5 will fall to spring 2020 values
If you see all of this, then unpack your stackable piggy bank and get ready for a hot period, we will be back in the game and the market of universal profits. As practice shows, everyone will have 3 to 6 months to get into their positions and get ready to take off. Also, remember that the market can be irrational, the main thing for everyone is to let their strategy survive it. Markets are capable of being irrational longer than traders will be solvent.
What to do now?
We’ve tried to give an answer to the question in our previous article. And we still stick to this local position. This article will allow you to look at the crypto market within macro analysis and the overall picture. But then everything depends on you!
Tell us if you study the macroeconomics rates, which indicators you use and which topics you would like to discuss! Don't forget to check links below and check our trading terminal!
NFA & DYOR
A LITTLE BIT OF THEORY
1. US PMI (Purchasing Managers Index) – macroeconomic indicator that shows the level of business activity.
2. DGS 1&5 – average 1 and 5 year US Treasury yield.
3. FED Funds Rate – the interest rate at which U.S. banks lend their excess reserves for short terms to other banks.
Let’s figure out what's GOOD and what's BAD for the crypto market
1. PMI
- Values above 50 are a good sign, the economy is growing, markets have more liquidity.
- Values below 50 are a bad sign, the economy is shrinking, there is less and less liquidity in the market.
2. DGS 1/5
- High rates are bad, people are used to investing where there is a clear yield and clear rules for receiving returns, where there is less risk.
- Low rates are good, bonds do not bring profitability, people are forced to choose more profitable, and therefore risky instruments for the preservation and multiplication of capital
3. FED Funds Rate
- High rates are bad, the interest on capital and liquidity is becoming more and more, the required level of profitability must be higher than the prime rate + the rate of the individual counterparty. Liquidity becomes less and less, access to it becomes more and more difficult.
- Low rates are good, liquidity is available to everyone, everyone can take funds to realize their goals and objectives, the overall profitability of any business is quite low. Lots of free money in the market.
Which market can be called BULLISH?
1. US PMI values above 50
2. Low DGS values 1/5
3. Low FED Funds Rate
That's the kind of market we had from April 2020 until November-December 2021. At that point, many realized that the music was no longer playing. The FED hammered the last nail in the coffin of the bull market in February-March 2022, and that's when all the fun and the official bear cycle began.
How do we know if the market has flipped and we're growing up again? Recommendations for PATIENT TRADERS
1. US PMI will come out of the crisis – current values are ATL from May 2020
2. The FED will do a soft landing, beat inflation and start lowering rates – very bullish signal. The important thing is to beat inflation, otherwise our bull market will be very short-lived, or the next bear market will be super painful.
3. DGS 1/5 will fall to spring 2020 values
If you see all of this, then unpack your stackable piggy bank and get ready for a hot period, we will be back in the game and the market of universal profits. As practice shows, everyone will have 3 to 6 months to get into their positions and get ready to take off. Also, remember that the market can be irrational, the main thing for everyone is to let their strategy survive it. Markets are capable of being irrational longer than traders will be solvent.
What to do now?
We’ve tried to give an answer to the question in our previous article. And we still stick to this local position. This article will allow you to look at the crypto market within macro analysis and the overall picture. But then everything depends on you!
Tell us if you study the macroeconomics rates, which indicators you use and which topics you would like to discuss! Don't forget to check links below and check our trading terminal!
NFA & DYOR
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