US Fed Raises Rates By 50 Bps

The FOMC meeting happened earlier this morning and brought with it a rate hike of 50bps. This has officially lifted the US interest rate over the US 10y bond yield, a signal that precedes a pivot in FED policy but also precedes global recessions.

The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.

The Cursed Crossover

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](https://www.tradingview.com/x/7AfYLMmb/)

Interactive chart: click on image for higher resolution

The chart above contains just over 50 years of US interest rate and US 10 year bond yield data. As we can see, when this crossover occurs it usually signals a turning point in FED policy regime turning from hawkish to dovish. This creates a false sense of security for investors, as they believe it signals loose monetary policy, whilst this is true it also precedes severe market routs and global recessions. What usually drives this recession is defaults on debt, this can be a sovereign state such as the case in the Asian financial crisis or private sector such as in the 2008 banking crisis. We're seeing similar patterns heading into 2023, this will lead to a severe rout in asset prices followed by a strong rally as looser monetary conditions come into light.

Bitcoin Holders Keep Growing

Source: glassnode

Despite the severe market rout and now living in a bear market for well over a year, the depressed Bitcoin price has brought in an army small Bitcoin holders. This is partially due to unit bias, as price comes down, an investors fiat purchase can secure more BTC. The lower price also serves as a mechanism to further distribute Bitcoin amongst holders and diversifies wallet distribution, so that there isn't a strong concentration in the holdings of a few wallets. So in essence, despite a year long bear market, we have seen continued Bitcoin adoption and this trend will only accelerate as we enter a sideways period of price action.

BTC/USD Key Levels

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](https://www.tradingview.com/x/KGNhJXLG/)

Interactive chart: click on image for higher resolution

Bitcoin has perfectly retested our key level of $18,217 USD. We had highlighted this several times over in previous Morning Notes as a major resistance level and upside target for recent long entries. As $18,217 now serves as key resistance, should we close above it on the daily chart, we will look for a strong move towards $19,673 before we hit a major resistance level. To the downside, we will watch for a retest of $17,300 whilst we trade under $18,217.

ETH/USD Key Levels

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](https://www.tradingview.com/x/e19aHCTw/)

Interactive chart: click on image for higher resolution

Ethereum has continued to hold above $1,300 USD and looks set to test the next levels of resistance. Should we hold above $1,300 the next retest will occur $1,386 and if we break and close above this level then watch for a sharp move towards $1,472. To the downside, if we lose $1,300 on the daily timeframe, we can expect a retest of $1,190. Should the sell off be considerable, major support kicks in at the $1,071 key level.

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

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