Today in Markets

Fed Comments Spook Market

Powell's comments put markets on edge, but crypto still ended the week up slightly.

Feb 3, 2024 • 2 min read

TradFi indices reached for new all-time highs as the total crypto market cap continued to hammer against $1.6T weekly resistance. What big event impacted markets this week?

Markets sold off on Wednesday’s FOMC press conference after Federal Reserve Chair Jerome Powell proclaimed that rate cuts were “unlikely” to occur by March, an event that the market had been pricing in, and reiterated that we had not yet achieved a soft landing, stating that the fight against inflation has a ways to go.

SUMMARY OF FED CHAIR POWELL Q&A (1/31/24):

1. There was no proposal to cut rates at this meeting

2. "I would not say we have achieved a soft landing yet"

3. "Don't think it's likely" that rate cuts start in March

4. It will take a couple of years for wages to normalize

5.…
— The Kobeissi Letter (@KobeissiLetter) January 31, 2024

After declining by over 4% on Wednesday, the total crypto market cap bounced on Thursday to allow crypto prices to finish off the week flat. Token prices stagnated into Friday, but positive earnings announcements from Amazon and Meta provided the fuel the S&P 500 and Nasdaq 100 needed to set their new all-time highs!

Despite gains in risk markets, early indications of trouble in America's regional banking and commercial property sectors are brewing.

New York City Bank, the bank that acquired Signature Bank after the March 2023 banking crisis, tanked 45% this week after posting a Q4 loss of $260M against analysts’ expectations for a $250M gain and the S&P Regional Banking ETF (KRE) is down 9% off its weekly high.

While the surface area for contagion is increasing, Arthur Hayes sees it as bullish for BTC, as the money printing used to combat it will translate into inflation and put on full display the virtues of a decentralized monetary system for the masses.

Contagion is spreading.

While the Fed won’t cut, they can change eligible collateral req to include CRE. That is back end money printing, but optically they can claim no rate cut due to “strong” econ. $BTC sees through their trickery. $1mm coins incoming.

Yachtzee 😘😘 pic.twitter.com/XI635OKMtq
— Arthur Hayes (@CryptoHayes) February 2, 2024

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

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