News
On March 19th, according to data from Farside Investors, the net outflow of $643 million from GBTC yesterday affected the total net outflow of Bitcoin spot ETF, which was $154 million, marking the third net outflow since January 25th (previously on February 21st, a net outflow of $35.7 million, and on March 1st, a net outflow of $140 million). As a result, the outflow yesterday also set a record for the Bitcoin spot ETF since its listing.
On March 19th, the Bank of Japan raised its benchmark interest rate from -0.1% to 0-0.1%, marking the first rate hike since 2007 and officially ending the 8-year era of negative interest rates. At the same time, the Bank of Japan announced the cancellation of purchases of ETFs and Real Estate Investment Trusts (REITs), while continuing to purchase Japanese government bonds at a scale similar to before. It is expected to maintain a loose monetary environment temporarily.
On March 19th, according to Yu Jin Monitoring, the whale who previously bought 13,689 ETH at a price of $2,600 through a margin loan in February has sold all ETH at an average price of around $3,400, expecting to make a profit of $10.95 million.
Market Review
The market rebounded during the time I posted the article yesterday, reaching a high near 69,000, then experienced a decline and did not return. It was a pity that it fell short of the resistance mentioned in the article by 500, and long positions also exited at breakeven or with losses. The morning market today fell to around 64,800 again, although there was a certain rebound, the strength is becoming weaker. Does the market need a big move to end this oscillating decline?
Market Analysis
Macro Analysis: With Japan's inflation exceeding 2% for 22 consecutive months, the results of the "Shunto" far exceeded expectations, reaching a high not seen in 30 years, clearing the last obstacle for the Bank of Japan to end negative interest rates.
Bank of Japan Governor Haruhiko Kuroda stated at a press conference in January that the focus was on the results of the "Shunto" negotiations in March. If it is confirmed that a benign cycle of wages and inflation is achieved, the Bank of Japan will consider changing its loose policies, including negative interest rates.
The "Shunto" results increase the rationality of raising interest rates for the first time at the monetary policy meeting on March 19th. Japanese media reported that the Bank of Japan may end its negative interest rate policy and abandon its Yield Curve Control (YCC) policy at the March meeting, returning to a simple quantitative easing policy in the future.
As of March 15th, the market expects a 56% probability of a 10 basis point rate hike at the March meeting, slightly higher than in April, with a cumulative rate hike of 27 basis points by 2024. A survey of 50 economists released last week showed that a slight majority of economists predict that the Bank of Japan will end the "negative interest rate era" in April.
Wall Street investment banks generally believe that there is still uncertainty about whether the first rate hike will occur in March or April, but the direction of the Bank of Japan's monetary policy normalization is clear. The Yield Curve Control (YCC) policy may be adjusted, but the Bank of Japan may temporarily be unable to exit its support for the government bond market. What impact will ending negative interest rates have?
Driven by the narrowing of the US-Japan interest rate differential, the significant undervaluation of the yen, and the resurgence of hedging demand, the yen is entering a new era of significant appreciation. The Federal Reserve is expected to cut interest rates three times this year, while the Bank of Japan is expected to end its 8-year negative interest rate policy in the second quarter of this year. This means that the interest rate differential between the two countries will significantly narrow, and the interest rate differential is a key driving factor for the USD/JPY exchange rate. Regression analysis shows that a 100 basis point change in the 10-year interest rate differential may lead to a 7-9 yen change in the USD/JPY exchange rate. After depreciating by over 25% in the past three years, the yen is expected to rebound in 2024, reaching 136 yen to 1 US dollar by the end of the year. At the same time, many capital holders who borrowed yen to buy US assets need to cash out and repay their debts, which is somewhat bearish for US assets. Therefore, the butterfly effect will affect the entire financial market, and the cryptocurrency market will naturally not be an exception.
Looking at the hourly market, it can be seen that the limited resistance was not reached during yesterday's rebound, and the market fell to the important support level near 65,000, where a small rebound occurred. Currently, it is still running in an oscillating decline, and the weak rebound may trigger an accelerated decline. At the same time, the four-hour RSI is already at a high level and showing signs of a turning point. The 64,800 level, as an important previous support, has been tested three or four times, and each rebound has been weaker than the previous one, indicating that the support strength has been weakened. With the Bank of Japan's first rate hike today, the bearish news of ending the era of negative interest rates has landed today. This situation is likely to lead to an accelerated decline in the market, ending the oscillation. Therefore, in the short-term market, it is recommended to focus on short positions, consider adding long positions near strong support, and pay attention to short-term resistance at 66,300-66,700 and 67,600. The lower support levels are at 63,888/60,444 and near 59,000. If the actual price falls below 59,000, then 53,000 will be the focus. Specific trading guidance will be provided in the actual trading process.
Technology leads the way, and the trend is king. Be cautious when entering the market, as trading carries risks.
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