QCP: The market has digested the Fed's 25 basis point interest rate hike, and the key to the future lies in policy guidance

According to BlockBeats, on September 14th, QCP released the "QCP Market Color" report stating that August CPI data showed that US inflation remained above the Fed's 2% target. The market has now largely digested the Fed's expectation of a 25 basis point rate hike this week, so the focus of market attention has shifted from "whether to raise interest rates" to how the Fed will express this rate hike and what signals it will send for the future interest rate path. The US CPI in August increased by 0.4% month on month and 3.4% year-on-year; The core CPI increased by 0.3% month on month, higher than the market expectation of 0.2%, but the year-on-year growth rate of the core CPI decreased from 2.5% to 2.4%. QCP stated that the strengthening of housing and energy prices has brought upward pressure on inflation, strengthening the reason for the Federal Reserve to raise interest rates by 25 basis points. At the same time, it also means that inflation has not fully returned to the target level, and the Federal Reserve is not facing a policy decision with a definite answer. Bitcoin's response to CPI data was relatively limited, dropping to $76700 at one point after the data was released, and then rebounding to around $77600. QCP believes that this indicates that the market has largely taken into account expectations of interest rate hikes. Ethereum remains around $2500, and institutional funds show different allocation tendencies towards the two types of assets. Last week, the spot Bitcoin ETF had a net outflow of $462.7 million, but on Friday, the net outflow slowed significantly to $13.2 million, lower than Thursday's $282.7 million; At the same time, the spot Ethereum ETF had a net inflow of $196.9 million, with a single day net inflow of $216.4 million on Friday. In terms of the options market, Bitcoin's volatility remained relatively moderate before the FOMC meeting, with the volatility curve continuing to tilt upwards. The 25 Delta risk reversal is about negative 3 volatility points, indicating that put option prices are still slightly higher than call options, but have not yet reached a level where market pressure has significantly increased. QCP expects that short-term volatility will continue to receive support before the meeting; If the magnitude and guidance of the Federal Reserve's interest rate hike basically meet market expectations, there may be a "volatility collapse" after the event ends. Technically speaking, QCP believes that BTC's current main resistance level is between $80000 and $82000, and the main support level is between $75000 and $76000; The resistance level of ETH is between $2500 and $2550, the support level is between $2400 and $2425, and the secondary support level is between $2300 and $2350. For the policy path of the Federal Reserve, QCP believes that if this interest rate hike is defined as an "insurance style" measure to address persistent inflationary pressures and release relatively restrained follow-up guidance, while long-term US bond yields remain stable or fall, it will benefit risk assets including cryptocurrencies. On the contrary, if the Federal Reserve raises its expectations for future interest rates and drives up US bond yields, it may mean further tightening of the financial environment and pressure on risk assets. The market will focus on the latest economic forecasts, especially the committee interest rate expectations reflected in the "dot matrix". At the same time, AI related stocks are under pressure due to market discussions that AI development may slow down due to security issues. QCP stated that the relative resilience of Bitcoin compared to technology and semiconductor stocks is conducive to reflecting its low correlation with traditional risk assets. However, if there is a deeper level of liquidation in the previously crowded trading of technology stocks, it may still be transmitted to the cryptocurrency market through a decrease in overall risk appetite and tightening financial liquidity. Another important catalyst for the cryptocurrency market itself is the CLARITY Act passed by the US Congress. QCP expects that the Senate will hold a procedural vote on the updated CLARITY Act on September 15th. If the bill is ultimately passed, it will further clarify the regulatory responsibilities of the SEC and CFTC, potentially reducing regulatory uncertainty and providing support for institutions to adopt cryptocurrency assets. However, QCP also emphasizes that procedural voting does not necessarily mean that the bill will ultimately be passed, and the subsequent legislative process will still determine its short-term market impact. QCP believes that the controlled reaction of BTC prices after the release of CPI, as well as the significant slowdown in the outflow of Bitcoin ETF funds, indicate that the market has largely taken into account the scenario of the Federal Reserve tightening policy. What is truly worth paying attention to next is whether the Federal Reserve's interest rate decisions, press conferences, and economic forecasts will change the current market benchmark expectations. If the policy guidance is moderate, BTC still has a certain risk return ratio near the support area of $75000 to $76000; But if the Federal Reserve releases a more hawkish follow-up rate hike signal and oil prices continue to rise, risk assets may still face further pressure. QCP predicts that there will be three main scenarios in the market this week: the Federal Reserve raising interest rates by 25 basis points and providing restrained follow-up guidance, indicating that there is still confidence in the decline of inflation; Raising interest rates simultaneously sends signals that future adjustments may continue, keeping long-term US bond yields high; Either unexpectedly choosing to postpone interest rate hikes, or releasing hawkish signals that are significantly stronger than expected. Among them, the trend of oil prices will become an additional variable. If there is a major disturbance in energy supply, the Federal Reserve may maintain a tightening stance even under pressure on economic growth, thereby putting greater pressure on risk assets. [Original link]