Based on how the stock market reacts to the Fed rate hike by basis points, you might think that risky assets are no longer in trouble. However, when looking at the big picture, it is obvious that this is far from the truth.

Last week, the Fed’s Open Market Committee (FOMC) decided to raise the key rate by basis points.

This is not surprising.

With inflation so high, the Fed has no choice. History will probably remember that they acted too late. This is the price to pay for sticking to the temporary inflation narrative.

But we cannot change the past. The only question now is how far will they go? Remember, FOMC members vote on projected rates over different time horizons. Each dot in the chart below corresponds to one vote per stake in each time period. The median of these votes (highlighted in red) is what I take to be the consensus over that period.

Take a look.

Aggressive actionsFOMC members’ estimate of the future Fed rate

Means that bets can be expected to end up at 1,684% by the end 2022 of the year. At least if the financial markets do not collapse before this date.

For reference, this median target of 1.643% on the b. higher than what the scatter plot signaled at the end 2021 of the year. Let’s talk about playing catch-up.

Aggressive actionsFed Rate

So why am I saying that the financial markets are likely to crash?

Just look at the yield curve. It continues to move towards an inversion, which is a strong signal that a recession is approaching.

See for yourself.

Aggressive actionsUS Treasury yield curve: – years vs 2 years

In fact, this graph can be used as an argument in favor of why the Fed will aggressively raise rates.

Right now they’re playing catch-up. The Fed’s rate is practically zero, which means they have no way to intervene when the next recession hits. no matter what they do. Then it makes sense to raise rates as quickly as possible before the recession kicks in so that they can do something later.

If this is really what they mean, then it speed up the process of deeper correction of funds th market.

Currently S&P is on the verge between a standard drawdown and what is actually a serious correction.

Aggressive actionsS&P Card 10

If the Fed prioritizes fighting inflation and raising the rate enough to have room to maneuver, then the Fed rate could be lower, than expected.

This means that bitcoin should decouple from risky assets as soon as possible. Otherwise, he will be at the mercy of a major correction in the stock market.

At the moment, digital assets are in a dangerous zone. This is something to watch closely.

Aggressive actionsBitcoin Correlations

If we could see bitcoin return to its long-term trend of being an uncorrelated asset, it would go a long way in reinforcing the preservation of capital narrative.

Receive Impulse

All things considered, bitcoin is not that bad for a bear market. If the pain stops here, then we can really say that BTC has matured and halving cycles no longer lead to ups and downs.

Of course, it’s still too early to tell and I don’t think bitcoin has left the danger zone. But it looks like the structure of the market is indeed moving towards something new.

Aggressive actionsDuration and depth of corrections

However, when it comes to building momentum, we haven’t achieved that yet. The accumulation rate (or participation rate), which measures the strength of on-chain accumulation of coins, remains in the lower part of the range. It has been localized there since the beginning of the year.

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Accumulation Trends

Recall that this accumulation valuation model is not a good sign for momentum. If you divide the accumulation rate into five segments and see how it correlates with bitcoin returns over the same period, you will notice that you usually need to see how the value of the indicator approaches 0.6 first to get the odds in your favor.

Aggressive actionsParticipation rate

This means that until we see the accumulation rate increase from 0.4 to 0.6, there is no point in betting on any long momentum.

To get there, we need to see again how larger addresses accumulate coins. Right now, the number of coins on addresses controlling less than BTC. Anything above BTC looks sluggish. Until the whales pass the hodling range set from August 2005 years, I don’t think bitcoin will be able to demonstrate any sustainable growth.

Aggressive actionsHodling Trends

So we will continue to monitor the development of the situation.

Change leaders

You know that more to gain from this mild bear market? Of course Ethereum.

There is absolutely no sign that Ethereum is splitting from Bitcoin. To date, the correlation between ETH and BTC is almost 10%. So it doesn’t look like the two are on different trajectories.

Aggressive actionsBitcoin-Ethereum Correlation

But a high correlation does not mean that they are growing at the same rate. And so far in this cycle, ETH is gaining momentum more systematically than in the second halving.

The main thing is that ETH/BTC is less volatile than before. And at the moment the pair has grown 3.5 times since the beginning of the cycle.×618.png” data-orig-file=”” data-orig- size=”3414,2022″ data-permalink=”https://bitnovosti .com/1982///agressivnye-dejstviya/agressivnye-dei-stviya/”height=”2035″ loading=”lazy” src=”” width=”2661″>
ETH/BTC dynamics during the cycle

Four years ago, when the bear market began, the ETH/BTC pair crashed so hard that it made no progress by the end of the cycle.

But if this bear market continues to moderate, it is likely that Ethereum will not lose its gains against Bitcoin. This is one scenario in which one could see ETH slowly creeping up on BTC’s market cap.

Ethereum’s activity has been heavily affected by ICO boom/bust cycles in the past, but it seems , this time the applications are more relevant.

DeFi and NFT projects make up the vast majority of applications running on Ethereum. And although the number of users of most decentralized applications is ridiculously small compared to the potential market, it has remained stable during this bear market.

Aggressive actionsActivity on OpenSea

I don’t know if this is enough to split, but we will start to track how the narrative about the Metaverse could affect the situation in the next bull market.

disclaim responsibility for any investment advice that may be contained in this article. All judgments expressed express exclusively the personal opinions of the author and the respondents. Any actions related to investments and trading in the crypto markets are associated with the risk of losing the invested funds. Based on the data provided, you make investment decisions carefully, responsibly and at your own peril and risk.

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