After the recent release of the FOMC minutes, it seems that the Fed is suggesting that it will do whatever it takes to curb inflation. Markets await Jerome Powell’s pronouncements at Jackson Hole on Friday with bated breath.
Market will draw inferences
Even though Jackson Hole is an academic conference, and not a policy-setting event, as the grey man in the grey suit gets up to give veiled hints at what the market might expect from the Fed going forward, all market participants will hang on every word and inferences will be made as to whether there might be a future shift in policy.
This bizarre lack of market direction has become even more pronounced given that the Fed has decided to drop future guidance since the last meeting, meaning that the crystal ball will be needed now more than ever.
It is expected that the Fed will also release details on how it plans to reduce the massive amount on its balance sheet of nearly $9 trillion. So far the previously mentioned reductions of $45 billion a month since June have not materialised in full. The amount of unwinding is also supposed to double from September onwards.
Bitcoin in nervy territory
Bitcoin is making a slight rally on Thursday, up around 1.5% on the day, and it’s lifting a little higher from the bottom of the bear flag it has been in since mid-June.
This particular bear flag is the Sword of Damocles, which has been hanging over the king of the cryptocurrencies all this time. The previous large bear flag continued for over 100 days before breaking to the downside. This one has been going for 70 days so far.
Should the pronouncements out of Jackson Hole suggest another large 0.75% rate hike from September, then bitcoin could face the dreaded break down out of the flag with the next stop perhaps as far down as $12,000.
Will Ethereum lead crypto out of the downtrend?
Ethereum is currently sitting at the resistance of $1,700, a level that it really must break. With the Ethereum Merge happening in only 3 weeks now, there isn’t too much time for any decent rally before the widely expected “sell the news” event.
However, should the Merge pass off without any major divergences from the plan, then once the market has finished the selling off, Ethereum could help to lead a crypto recovery.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source:https://cryptodaily.co.uk/2022/08/crypto-market-nervy-as-jackson-hole-looms