The macro-economy for 2023.

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Avatar for francis105d2
9 months ago

Inflation went as high as 9.1% in the United States if memory doesn't betray me, and as I write this article inflation is at 7.1%, the Fed has increased at least twice to 0.75% which is what did the job of bringing inflation down. For 2023, you should expect at least 10 meetings and Powell said they are willing to continue increasing rates until inflation gets under control, and that is the reason why the market is going down this week. But the devil is always in the details.

If the Fed must increase rates at least twice next year to 0.75% and another 3 at 0.50% and probably the other 5 at 0.25% that will be the worst-case scenario and that will mean assets like stocks will go down, and houses too because interest rates for borrowers will be through the roof, the total increase could be around 4.25%. I don't think that will happen.

A mild case will be where only 3 increases are at 0.50% and the rest at 0.25% without any flats or reductions.

A soft landing will be where the fed only increases rates to 0.5% two to three times, some 4 at 0.25, and the others 3 keep it flat, that will be the best scenario for stocks and assets because in the three scenarios inflation gets under control by December next year.

If the Fed tries to lower interest too soon it may affect negatively the whole market because inflation could go up and bringing it down could take more effort and bigger increases, so it is better to continue increasing once they have started so that they reach their goals sooner.

The short answer is the United States Federal Reserve will continue to increase rates for 2023 and that means that assets like houses and cars may get a price reduction, and probably stocks like assets may see a price decrease too, and that includes cryptocurrencies across the board.

Bitcoin could try to do its own thing and decouple from the stock market but since a lot of the big traders that trade Bitcoin also trade stocks their sentiment will affect the whole cryptocurrency market and as an extension of that Bitcoin Cash too.

If I am not wrong BCH is only about $20 to $30 away from reaching its previous all-time low so the macroeconomy could still affect it and make an even lower low if the whole economy goes down because of the Fed, but the silver lining could be that those who were holding the supply are already gone and done and don't have anything else to dump to the market and maybe this time BCH could become an outlier.

I have been using lately the Dow Jones chart as an indicator for Bitcoin because I think that Bitcoin may follow the stock market next year too, and unfortunately, I also believe that as long as Bitcoin remains low and influenced by the macro economy altcoins like Bitcoin Cash won't pump and if they do it will only be to provide exit liquidity for big whales.

Bitcoin Cash has two needed features or tools, RainCash and NoiseApp both will become useful for users and probably there is more coming (I forgot the name of those but something about any hedge or something like that) but even with all that development, you can't ignore what is going on around you. But those tools could play an important role in the next bull run.

I guess the essence of this article will be to have some fiat set aside in case you see buying opportunities because of current market conditions, and if not, just save the assets you already hold without panic selling.

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9 months ago