The Fed's interest rate hike took effect, and Bitcoin fell first and then rose

The Federal Reserve’s two-day March interest rate meeting ended at 2 p.m. Eastern Time on the 16th, or 2 a.m. Beijing Time on the 17th.

Conclusion: A 25 basis point (0.25 percent) rate hike will take effect on the 17th. The federal interest rate will be raised from 0-0.25% to 0.25-0.5%.

Nine Federal Reserve representatives voted, eight voted in favor and one voted against - because St. Louis Federal Reserve President James Bullard believed that the increase was too little and should be 50 basis points at one time.

The Fed this term is a conservative and cautious one. There are no surprises, no surprises, and the maximum expected rate hike before the meeting is 25 basis points.

At this point, the much-discussed debate over interest rate hikes has finally come to an end.

The taper started in November last year and ended in June, announcing the turning point of this round of QE4. In December, the taper was accelerated and ended in March, and the market began to be filled with rumors of interest rate hikes. At one point, there were rumors of extremely hawkish moves, such as the immediate start of balance sheet reduction (QT) in March and a one-time interest rate hike of 100 basis points.

The interest rate meeting in January this year was a lonely one, but the conclusion can only be drawn in March at most.

Inflation has not eased at all, and Eastern Europe has become chaotic.

According to Powell's speech at the press conference, the job market is recovering strongly. So if inflation eases, there is no need to rush to raise interest rates and shrink the balance sheet. If the economy is not turbulent, then we can raise interest rates and shrink the balance sheet more boldly.

The current situation is that inflation is high and the economic outlook is still full of uncertainty, so interest rates need to be raised, but they can only be "gentle" at first, and we dare not raise interest rates to a level higher than inflation like former Federal Reserve Chairman Paul Volcker did.

Although Paul Walker defeated inflation, he also drove himself out of office.

The current inflation level has returned to the 1980s, similar to the situation Paul Walker faced back then. However, Powell will not be Paul Walker.

However, Powell still said that the balance sheet reduction will resume soon, and the balance sheet reduction plan will be announced as early as the May interest rate meeting.

The Federal Reserve meeting in May is scheduled for the 3rd to 4th.

Since November last year, the market has responded to expectations of the Federal Reserve tightening its monetary policy, raising interest rates and shrinking its balance sheet.

On October 15, 2021, the market was full of fighting spirit and gearing up for a peak of 100,000+ by the end of the year. At that time, I wrote "There is no second half at the end of the year", singing a different tune and pouring cold water on it; the pie was 60,000 US dollars at the time.

On November 4, 2021, I wrote in my notes "The Federal Reserve tapers as expected!" The Federal Reserve officially decided at its November interest rate meeting to immediately begin tapering bond purchases (tapering) until June 2022, and QE4 began to turn around; the Fed's interest rate was $62,000, and a week later on November 10-11, it reached a high of $69,000, close to $70,000.

On December 1, 2021, I noted in my notes that "Powell made a tough statement". Powell publicly stated that he would immediately push for accelerated taper; on December 16, I wrote "The Fed accelerated the tightening of monetary policy, and the market stopped falling and rebounded". The Federal Reserve's December interest rate meeting officially decided to accelerate taper until March 2022; the bitcoin price was 58,000 US dollars, and it could not hold on on the 4th four days later, and it quickly plunged to a low of 41,000 US dollars.

On January 7, 2022, I wrote "Who is reheating the Fed's interest rate hike and balance sheet reduction?" The minutes of the Fed's December meeting were made public, and the market suddenly discovered that the Fed had already had the idea of ​​raising interest rates in advance and even switching to quantitative tightening (QT), that is, reducing the balance sheet! At that time, the big cake had fallen back to $41,000, which was the lowest point of the December pin. On January 12, Powell attended the hearing, and the "Full Text of Powell's Testimony at the Hearing for Re-election as Fed Chairman" was recorded in my notes. On January 27, I wrote in my notes "The Fed is calm, Powell is tough and soft". The Fed's January interest rate meeting ended without any new conclusions. The tense expectations at the beginning of the month suddenly turned into a lead without firing, and everything was pushed to the March meeting for a decision. The big cake dived ahead of schedule on the 22nd, and fell below the level of $33,000. Compared with the highest point in November 2021, it has been halved. After a lonely interest rate meeting, it has eased and returned to around $36,000.

On March 17, 2022, I wrote in my notebook "The Fed's interest rate hike has landed, Bitcoin fell first and then rose", which is this article. The Fed's March interest rate meeting ended, and the shoe fell. The interest rate was raised by 25 basis points, and there was no balance sheet reduction for the time being. When the conclusion of the meeting came out, Bitcoin first fell to $39,000, and then quickly rebounded, rising above $40,000.

Looking further into the six-month window, the Fed is determined to end this round of monetary easing, and the signal is clear, and it keeps its word. As for the market's resistance, it is unwilling to accept the end of the monetary easing era, and then fantasizes about continuing to sing and dance, but it will eventually succumb to disappointment and blows again and again.

Next, the Fed has entered the fast lane of interest rate hikes and balance sheet reduction. The dot plot predicts 7 interest rate hikes this year, which is more than double the 3 times in the dot plot in December last year.

History is a lesson for us. After the Bretton Woods system collapsed in 1971 and the dollar was decoupled from gold, the dollar continued to be over-issued and depreciated. In 1982, encouraged by President Reagan's neutral stance, the Argentine authorities launched the "Falklands War" and took back the Falklands from Britain. Reagan immediately changed his attitude, strongly condemned Argentina and supported Britain. Britain then dispatched aircraft carriers and defeated the Argentine army. The Argentine government fell, and the Falklands have not been returned to this day.

The Falklands War destroyed the entire Latin American economy. The investment environment deteriorated and capital fled. The Federal Reserve saw the right opportunity and announced that it would start raising interest rates. The dollar strengthened, the dollar index doubled, and capital flowed back to the United States in large numbers for risk aversion. Latin America was harvested.

Almost all the capital that fled from Latin America flowed to the United States, pushing up the stock market, bond market, and futures market. The United States ushered in its first big bull market after its unilateral default that led to the disintegration of the Bretton Woods system. The United States won.

The dollar, which lost its gold constraint, began to embark on the "evil" path of free expansion and contraction, and the dollar cycle and circulation came on the stage. Along with it, the United States repeatedly watered and raised interest rates to harvest other economies.

At that time and moment, it was just like this moment.

At this moment, the world is also experiencing a war that has attracted global attention. At this moment, the Federal Reserve has just announced that it will begin to raise interest rates. At this moment, the economic problems faced by the United States in the past two years urgently need relief.

Everything is an open conspiracy. Even if you see through it all, you can only fall into the trap obediently.

An open conspiracy needs a countermeasure.

Big Pie was well prepared for this cycle.

In 2019-2020, it attracted American institutions to enter. In 2021, it was fully tied to the US stock market, decoupled from the participation of Eastern retail investors, and even moved all mining to the West, which completely solved the biggest concern of European and American institutions in building positions for many years, that is, the computing power was controlled by the East (refer to Mike Hearn’s several concerns about the development of Bitcoin in his article in January 2016).

The market is ready to welcome the return of US dollars.

And you?

At this moment, Déjà vu.

(Official account: Liu Jiaolian. Knowledge Planet: reply “Planet” to the official account)