Next week, the crypto circle is likely to stage a 'battle of the immortals', where on one side is the 'sword of Damocles' of the Bank of Japan’s interest rate hike hanging overhead, and on the other side is the 'lifesaving straw' of the Federal Reserve's rate cuts being frantically grabbed by the market. This dramatic juxtaposition of ice and fire surely makes anyone watching say 'exciting', right? Don't scroll away, today we will thoroughly analyze the crypto opportunities in this macro game. Long-time followers know that I never deal in nonsense!
First, let me share a knowledge point for new followers: In the past, whenever the Bank of Japan dared to think about raising interest rates, the crypto circle would tremble. Why? The yen carry trade is a significant source of liquidity for crypto funds. Once interest rates rise, the cost of capital increases, and many speculative positions would have to flee overnight, with highly volatile crypto assets being the first to be affected.
But this time is different! Highlight this, it's solid information: First, the market has had expectations for a while. Unlike before when interest rate hikes caught everyone off guard, this time, the rumors of the Bank of Japan raising rates have been circulating for nearly a month, and the crypto market has already digested some of the panic, much like the dark clouds before a storm that look frightening, but when it actually rains, the impact isn't as severe. Second, the Federal Reserve is on the side 'coordinating'. Now the market is betting that the probability of the Federal Reserve lowering rates before March next year has almost surpassed half, with dovish signals coming one after another. It's important to know that the Federal Reserve's policies are the 'anchor' for global asset pricing, and as long as it releases signals for easing, it can offset a lot of the outflow pressure caused by the Bank of Japan's interest rate hikes.
More importantly, this time might be a good opportunity for mainstream funds to reassess crypto assets. Many people think that crypto assets only survive on macroeconomic conditions, but that's only half true. We need to look at the real situation on-chain: Recently, the narratives surrounding Ethereum have been continuous, especially the project related to the meme 'Elon Musk's little puppy' that everyone has been playing with. Although it carries some MEME attributes, its popularity precisely indicates that the deeper emotions in the market haven't cooled down, and everyone is still looking for new outlets. The vitality of MEME is essentially a 'barometer' of market liquidity and participation enthusiasm. As long as this momentum remains, crypto assets won't completely flatline.
To be honest: don’t panic, and don’t be blindly optimistic. Although the macro game is exciting, the core of the crypto market is still 'narrative + capital'. Next, we need to focus on two signals: first, the flow of funds after the Bank of Japan's interest rate hike is implemented, and second, the statements from Federal Reserve officials. I will continue to track these dynamics and discuss them in real-time in the comments section. If you find this analysis useful, follow me @链上标哥 so you don’t get lost!
