As an experienced market analyst with a decade-long career in financial analysis and forecasting, I must admit that the current market landscape is as unpredictable as ever. The anticipated 2.5% CPI figure later today could be a game-changer for risk assets like Bitcoin. Historically, such low figures have often preceded market corrections, but the unprecedented monetary policies of recent years make it difficult to draw definitive parallels with previous economic events.
Later today, we might see a predicted Consumer Price Index (CPI) figure of around 2.5%. This could pave the way for a potential 0.5% reduction in interest rates by the Federal Reserve next week. Meanwhile, while an immediate upward trend for Bitcoin may not be on the horizon just yet, it’s possible that such a trend could become increasingly likely during the final quarter of the year.
Lower CPI figure expected
As a researcher, I’m keeping an eye on the predictions about today’s Consumer Price Inflation (CPI) announcement, based on the account in the Kobeissi Letter regarding major U.S. banks. The forecasts suggest that we might see a CPI figure of either 2.6% or 2.5%. If this prediction holds true and the actual figure is 2.5% or lower, it would mark the lowest CPI since February 2021. Such an outcome would be favorable news for risk assets like Bitcoin.
Historically, whenever the Federal Reserve (Fed) has shifted its monetary policy stance, it has often signaled a potential downturn in the market. So, it’s crucial to exercise caution, particularly over the short-term to medium-term period.
Bearish divergence for S&P 500
As I delve into the analysis of market trends, a striking observation unfolds when examining the weekly chart for the S&P 500. Here, bearish divergence is evident as prices ascend, while indicators such as the Relative Strength Index (RSI) and Stochastic RSI descend. If this divergence materializes, it could trigger a significant correction in equities, which might exert substantial downward pressure on Bitcoin and other cryptocurrencies.
Comparisons with Great Financial Crisis
To put things into perspective, it’s worth noting that if we trace back to before the Great Recession in 2007, the Federal Reserve reduced interest rates for the first time on September 18th – the same date they are projected to lower them this year. Following this initial cut, a significant market crash occurred, which became infamous as the Great Financial Crisis. The S&P 500 plummeted by approximately 57%, resulting in a collective loss of nearly $1 trillion from the top 500 U.S. companies.
In simpler terms, it’s unlikely for this event to happen right now given that the S&P continues its upward trend. A significant amount of cash is expected to flow into the market over the coming months and into next year, as central banks increase their printing of money to cover debt obligations.
More consolidation for $BTC
Examining the Bitcoin price within a short-term timeframe, it’s clear that the price broke free from the downward channel and even touched the significant $58,000 resistance level. Yet, the bullish momentum subsided, despite another effort at this point, and now the price has been pushed back again.
At the moment, Bitcoin is holding at around $56,500. It’s uncertain if it will drop below this point, which could lead to a decrease in value to approximately $54,800. If that happens, there might be a quick dip even lower, testing the upper boundary of the descending channel.
In summary, over the coming week or so, it appears that the market trend might be stabilizing and accumulating, as the Weekly Stochastic RSI is moving towards a potential bottom. When this indicator starts rising again, it could signal the beginning of another significant upward move in the market, assuming economic factors remain favorable.
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2024-09-11 12:12