1/ Wednesday sees the Fed deliver their policy update for May.

Expectations are for this to be the final 25bps hike for this tightening cycle, so will it?

And what about QT and rate cuts later this year?

Let's investigate 👇 2/ The Fed have led this tightening cycle (along with the RBNZ) by hiking +475bps in just over 12 months.

Tightening is approaching it's final stages as we reach the Fed's terminal rate communicated that was communicated to the market back in March.

1/ A thread discussing the US dollar.

- Drivers of DXY in 2023 (up, down or sideways)
- DXY correlations / why the USD matters.

Let's go👇 2/ Firstly, let's understand how the DXY is measured and then take a look generally, at what makes currencies move.

DXY is a measure of the dollar's performance against a basket of other fiat currencies. Narratives/news specific to a non-dollar currency, will also move the DXY.

1/ While most data is lagging, what tends to lead price is monetary + fiscal liquidity...

Let's quickly investigate whether liquidity has peaked or if new highs are to come👇 2/ The recent surge in global liquidity has been owed to:

- US debt ceiling situation --> Treasury drawing down on their cash reserves,
- Banking crisis --> Fed balance sheet expansion to backstop failing banks,
- China restarting their economy post-COVID --> stimulate with $$

1/ There's a new player in town!

China's central bank performed it's single-largest liquidity injection on Friday, to help support their economy out of historically depressed levels.

+ there's more to come 🇨🇳 2/ China boasts the world's second largest economy and has recently expanded at a pace ~2.2% faster than the US.

The People's Bank of China (PBoC) are the world's third largest central bank with ~$6T in assets and play a key role in global liquidity.

1/ In December, I mentioned some themes to watch out for this year... here's a more detailed thread of those ideas; I'll update this post in real-time as developments occur.

This year will provide a very challenging environment to trade!

Theme #1 'Central banks pause by Q2' 📝 2/ The US Federal Reserve hiked rates by 400bps in 2022 + there's more to come in 2023.

The December 'dot plot' showed that the Fed see the terminal rate for this cycle >5%, which was higher than what they'd previously projected in September.

1/ BTC has been around since 2009, and so far we can say that #Bitcoin bear markets typically end:

🔻 After price moves -85% off the previous bull market high.

⏱ ~470 days before the next halving

[A thread on a macro bottom + new bull cycle] 2/ BTC is +44% in January alone, traders are beginning to wonder if the lows are already in and many people are sidelined 🤷‍♂️

Institutional capitulation has seemingly peaked, the 2024 Bitcoin halving is becoming closer by the day and the Fed are close to pausing rate hikes.

1/ Today's US CPI report is expected to show month-on-month DISINFLATION for the first time since June 2020 📉

However, core inflation is expected to tick higher --> which could place pressure on risk assets.

Here's what the top banks are saying 🧵 2/ This event is important given that it is the final CPI before the February FOMC

This will help the market price the Feb. FOMC decision - currently the market sees a 25bps hike as most likely

Upside miss in CPI increases odds of 50bps, downside miss increases odds of 25bps ℹ️

1/ Apparently tweeting what Powell says implies that you are bullish/bearish.

To be clear, these levels are where you buy. BUT the opportunity cost presented by the market moving sideways until the Fed pivots to looser policy is extremely high right now. 2/ So you buy now, everything down 90%++ but the market moves sideways for 12 months as the Fed hold rates high.

Until the hawkish commentary subsides + we see a prolonged downtrend in inflation data. It is extremely unlikely that we will see a new bullish cycle for risk assets

1/ FOMC meeting minutes are due Wednesday this week.

And that should see equities + crypto struggle while treasury yields + US dollar move higher.

Reversal of the CPI hopium seems most likely. I’ll explain 🧵 2/ The market got well out in front on a lower than expected October CPI print. Equities + Crypto both sharply higher

Expectations of slowed rate hikes and a lower terminal rate grew.

After quarters of hot inflation, the market got over-zealous on a long awaited lower CPI print

1/ FTX vs BINANCE

CZ and Sam have been going back and forth on Twitter over the past 48 hours, so what has happened and how did we get to this point 2/ Just as a disclaimer:

- I don't believe that the rumors of FTX being insolvent are true
- Comparing FTT to LUNA in my opinion, is ridiculous
- There are many layers to this situation
- This is not in any way financial advice

1/ FOMC this week (Wednesday 18:00 UTC)

There’s lots of talk about a ‘pivot’ or that ‘the Fed are breaking things and need to stop hiking.’

But, the data says otherwise and points to nothing other than hawkishness again this week.

I’ll explain 👇 2/ Both inflation and employment market data inform the Fed’s monetary policy stance.

Since the previous Fed meeting in September - Core Inflation has continued to run hot, and the employment market has remained strong.

https://twitter.com/tedtalksmacro/status/1578362517612789765?s=46&t=2XNmjdVvwhzDjxuAinQtyg

5 Altcoin charts to watch over the coming days 👇

#1 $BNB

4th test of high-time frame resistance, after 70 days in a range. As long the yellow level holds I see min. +5% this weekend.

Given doge move on twitter hype, BNB could too benefit - CZ heavily invested in the takeover #2 #Solana

One of the cleaner bottom formations right IMO.

So long as the yellow circle holds, I see a push into the range highs and if it can really get going - A push into $38 USD very quickly.

The FUD is strong with this one, so it will likely be a hated rally.

1/ CRYPTO MOVE CONTRACTS

What are they?
How do they work?
How you can profit.

Follow along and I'll explain how you can trade crypto volatility 🧵 👇 2/ Firstly, to understand this thread you'll need to have a basic understanding of 'volatility'

Broadly, it's a metric that measures how much the market expects price to move over a specified period of time. The more volatile a product is, the higher its volatility.

1/ With volatility at all time lows, the market is setup for an explosive move.

A look at the key events this week that could push BTC below 18k or above 21k - depending on the outcome 🧵 👇 2/ Firstly some context, last week's job data showed that the Fed's aggressive tightening is not done yet.

Unemployment edged lower, jobs were added and wages lag inflation. A 75bps hike in Nov. is base-case, unless future data points to otherwise.

https://twitter.com/tedtalksmacro/status/1578362517612789765?s=20&t=UgBKrC7jOHLhr3PgcNPY9w

1/ A thread covering the resources/platforms that I personally use for trading cryptocurrency markets:

- Derivatives data
- Macro insights
- Technical Analysis
- Research 2/ Laevitas - derivatives data @laevitas1

Learn how traders are positioning in futures + options markets.

25d skew can give a good indication as to overall sentiment in the options market.

Here's a thread explaining how:

https://twitter.com/tedtalksmacro/status/1420627887896424451?s=20&t=cyIisLeQHlAMOjt313vNbA

1/ The next US CPI print is only a few weeks away.

Current expectations 👇
Headline: +0.3% MoM, +8.2% YoY (prev. +8.3%)
Core: +0.5% MoM, +6.6% YoY (prev. +6.3%)

These numbers resemble this month's print, although exp. prior were different.

Core ticking higher is big. 2/ Between now and then, US PCE will show how inflation is tracking within the US economy. It's due tomorrow.

Expectations are that core ticked higher by 0.5% MoM, which should place pressure on risk assets.

https://twitter.com/tedtalksmacro/status/1561403008608763904?s=20&t=ooEOdc6tPF8JwsMID9bN8w

1/ 75bps or 100bps in September?

The US Federal Reserve will deliver their decision on monetary policy in the US this week and that will impact #Bitcoin + crypto.

Here's what the market is expecting: 2/ At the time of writing, the market has mostly priced in a 75bps hike and has discounted the likelihood of a 100bps hike.

According to the CME Group’s FedWatch Tool, a 100bps hike has just an 18% probability of occurring.

1/ Notes on a EUR bottom and DXY top this quarter.

The Fed led the charge this tightening cycle while the ECB have lagged significantly.

Presenting a central bank policy divergence, stubbornly low rates in Europe devalued the EUR while higher rates in the US buoyed the USD. 2/ evidence is growing that inflation has peaked in the US and at some point this quarter, the Fed likely acknowledge that. This will fuel speculation of a pause in the US tightening cycle.

1/ This coming Friday, US PCE data is due. It’s the most important data point to determine Fed action going forward.

Consensus is that PCE peaked in June and that Friday’s data will confirm this.

If true, it’s significantly bullish for risk assets like #Bitcoin + equities. 2/ What’s so significant about PCE data is that the Fed have publicly stated that it’s their preferred gauge of inflation in the economy… making this data point even more significant than CPI.

As this metric is yet to peak, the Fed are keen to continue tightening. But Friday…

1/ The coming month could 'confirm' that the bottom was in a while back.

The Fed are due to hike by 50bps in Sept. signalling that oversized hikes have peaked and reversion toward 'softer' action is to come. 2/ IF data continues to show that inflation has peaked, risk-asset FOMO will be massive. Those who have been scared out of the market on:

- unprecedented hawkishness
- record inflation
- war

Will be forced to accept that they missed the bottom and must buy back higher.

1/ 850,000 #Bitcoin was stolen from Japanese exchange Mt. Gox in 2014, worth ~$500M at the time.

Creditors will begin to receive some of the stolen BTC back in the coming month - potentially adding sell pressure to the market.

FUD or should we pay attention? 2/ Last month the trustee handling the case posted an update that they were 'preparing to make repayments' in accordance with the 'rehabilitation plans' approved by creditors in 2021.