16 März 2020

Market Commentary: the Fed’s motto must have been „go big or go home“

Patrick Heusser

Patrick Heusser

Senior Trader bei Crypto Broker AG

Über den Autor

I think the Fed’s motto must have been „go big or go home“. They went with „go big“, but the market did not care.

Here is a brief summary of how the market reacted.

The Fed cuts the interest rate by 1%, boosting the asset purchase programme (article from Bloomberg here).

– S&P e-mini futures open limit is down 5% (was up 10% on Friday)
– 10y T-Note up more than 2 full points (from 136.2 to 138.50)
– Bitcoin jumps to 6k & retracts
– Gold up 1.5%
– Oil down roughly 7%
– Dollar index DXY down 0.9%

I am stunned when looking at the changes in these key assets. They simply denied to show any positive signs after one of the largest and unprecedented rescue packages for the financial market. Then again, I am also surprised by the stability of bitcoin. It rallied up following the news, but quickly realised that traditional markets would not follow. During those hours, the crypto market traded in a very orderly fashion.

This either shows that bitcoin had already had its capitulation moment, or that the market is paralysed and will just move in sympathy with traditional assets. The current range for BTC$ is between 4.9k – 5.9k.