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FOMC REPORT : Stocks, Bonds, BTC & GoldHi Traders, Investors and Speculators of Charts 📈📉 Did you miss the 2023 June 13/14 FOMC meeting? No worries, CryptoChecks' got you covered. Here's a summary of what happened and how the outcome of this meeting may affect the respective markets. First, let's clearly understand the FOMC meeting and it's importance to investors. The Federal Reserve, also known as the Fed, is the central banking system of the United States. It guides the country's monetary policy and influences the economy. The Fed's announcements and statements are closely watched by traders and investors because they can have a significant impact on financial markets. The Federal Open Market Committee (FOMC) is a committee within the Fed that makes decisions on monetary policy. It consists of twelve members, including the seven members of the Board of Governors and five Reserve Bank presidents. They meet eight times a year to discuss and set policies. FOMC meetings are important events for traders because any changes in interest rates can affect various economic factors, such as employment, inflation, and exchange rates. The meetings occur every six weeks, and some include a Summary of Economic Projections (SEP) and a press conference by the Fed Chair. Traders pay close attention to the Fed's decisions and statements because they provide valuable information about the state of the economy and future policy changes. Now, let's look at what was said in this FOMC meeting: The Federal Reserve decided to pause its series of interest rate hikes at its June meeting, following ten consecutive increases. While the central bank expressed optimism about curbing inflation, the battle is not yet over, and further rate hikes may be on the horizon. Important facts: 🏛 The Federal Open Markets Committee (FOMC) announced that the federal funds target rate would remain unchanged within a range of 5.0% to 5.25% during the June meeting. This marks the first policy meeting since the start of the Fed's tightening cycle in March 2022 in which interest rates were not raised. 🏛 The Fed confirmed its plan to continue reducing its balance sheet by allowing up to $60 billion in Treasury securities and $35 billion in agency mortgage-backed securities (MBS) to roll off each month, employing quantitative tightening to combat inflation. 🏛 Fed Chair Jerome Powell acknowledged the challenges during the press conference and highlighted the uncertainties surrounding the effects of monetary policy on the economy and potential credit tightening headwinds. Despite the pause, it does not indicate the completion of the Fed's interest rate hike cycle, and further increases may be necessary. 🏛 The Fed has been attempting to navigate the challenge of curbing inflation without causing a recession by gradually raising interest rates. Higher rates increase borrowing costs for businesses and consumers, slowing down economic activity. 🏛 The consumer price index (CPI) rose by 4.1% annually in May, down from the 4.9% gain in April, which was the highest in 40 years. The core personal consumption expenditures price index, the Fed's preferred measure of inflation, increased by 4.7% in April, slightly up from March but lower than the 2022 peak of 5.3%. The long-term target for core PCE inflation is 2%. 🏛 The tight U.S. labor market has posed challenges in the fight against inflation. In May, the U.S. economy added 339,000 jobs, surpassing expectations, and wages increased by 4.3% year-over-year. The unemployment rate rose to 3.7% but remained near historic lows. 🏛 Powell indicated that further rate increases might be necessary to gradually bring inflation down to the 2% target. _____________________________ Overall, the potential impact on stocks, commodities, and bonds could look as follow: Stocks: The impact on stocks can be more nuanced. In general, a steady interest rate environment can be positive for stocks. Lower rates can make equities more attractive as an investment option compared to bonds or other fixed-income assets. It can encourage borrowing for business expansion and investment, potentially boosting corporate earnings and stock prices. However, if the market was anticipating a rate cut or an increase, a decision to keep rates unchanged might cause some short-term volatility or adjustments in stock prices as investors reassess their expectations. This could positively impact stock prices, especially in sectors that are sensitive to interest rates, such as technology, consumer discretionary, and housing. Commodities: When interest rates remain steady, it can provide stability and potentially support commodity prices. Lower interest rates generally make borrowing cheaper, which can stimulate economic activity and increase demand for commodities. Conversely, higher interest rates can have the opposite effect, potentially dampening demand and putting downward pressure on commodity prices. Bonds: The pause in interest rate hikes may be favorable for bond prices in the short term. When interest rates remain stable or decline, existing bonds with higher coupon rates become relatively more attractive, leading to increased demand and potentially higher bond prices. Lower interest rates also reduce borrowing costs for companies, which may improve their creditworthiness and decrease the risk of default, making corporate bonds more appealing to investors. Now, you may be wondering to yourself... despite the above; why is Gold (and BTC) falling instead of rising? 💭💭💭 EXTRA for EXPERTS: The fact that the US House of Representatives have passed US debt ceiling bill five days ahead of the deadline could be a reason behind the falling price of Gold. With this in mind, it becomes easier to see why the gold market could have slipped. Still, rampant inflation will probably keep a floor under the gold market and as such; a short term drop to next immediate support zone is the most probable. While the true utility of the metal as a hedge against rising prices is a subject of endless economic debate, many investors insist that it is. It’s notable that prices remain close to historic high levels despite much higher interest rates more or less everywhere. The backdrop of war in Ukraine, tensions in the South China Sea, and the durability of post-covid recovery are also clearly supportive of perceived ‘haven assets’ like gold, silver and bitcoin. Is it possible that the large, corporate investors are just countertrading the bullish retail investors in the commodities market at this point? The odds of a July rate hike are at about 61%, according to CME FedWatch Tool. Investors anticipate a 61.5% chance of the Federal Reserve hiking rates by a quarter point at its July 25-26 meeting, according to the CME FedWatch Tool. The metric hasn’t moved much since Tuesday, even as the central bank indicated in its dot plot on Wednesday that two more rate hikes are coming up. To understand the relationship between commodities, cryptocurrencies, bonds, and stocks can help you clearly plan your next move after the FOMC meeting. Commodities and Stocks: Inverse Relationship: Historically, there has been an inverse relationship between commodity prices and stock prices. When commodity prices rise, it can lead to higher production costs for companies, affecting profit margins and potentially dampening stock performance. Conversely, when commodity prices decline, it can lower input costs for companies, potentially benefiting their profitability and supporting stock prices. Cryptocurrencies and Stocks: Limited Relationship: Cryptocurrencies, such as Bitcoin and Ethereum, have gained prominence as a separate asset class and are not directly tied to traditional stock markets. As such, the relationship between cryptocurrencies and stocks is generally limited. However, during periods of market volatility or significant news events, there can be some short-term correlations as investors seek alternative assets or sentiment spills over from one market to another. But in terms of long-term correlations, the two asset classes have shown relatively independent behavior. Bonds and Stocks: Inverse Relationship: Bonds and stocks typically exhibit an inverse relationship. When interest rates rise, bond yields increase, making fixed-income investments more attractive relative to stocks. This can lead to a shift in investor preferences from stocks to bonds, potentially putting downward pressure on stock prices. Conversely, when interest rates decline, bond yields decrease, making stocks relatively more attractive, which can contribute to higher stock prices. The relationship between bonds and commodities is typically more complex and can be influenced by several factors: Inflation Expectations: Commodities are often considered an inflation hedge because their prices tend to rise during inflationary periods. When inflation expectations increase, commodity prices may go up, which can lead to higher inflation-adjusted yields on bonds. In this case, there may be a positive correlation between commodities and bond yields. Economic Growth: Commodities, especially those related to industrial sectors like energy and metals, are sensitive to economic growth. When the economy is booming, demand for commodities tends to rise, potentially leading to higher prices. This can be associated with higher inflation expectations and upward pressure on bond yields. Hence, there can be a positive correlation between commodities and bond yields during periods of economic expansion. Safe-Haven Demand : Bonds, especially government bonds, are considered safe-haven assets that investors flock to during times of uncertainty or market turbulence. In contrast, commodities, which are more directly influenced by supply and demand dynamics, may not exhibit the same safe-haven characteristics. Therefore, during risk-off periods when investors seek safety, there can be an inverse relationship between commodities and bond yields. Interest Rates and Opportunity Cost: Changes in interest rates can impact both bonds and commodities. When interest rates rise, the opportunity cost of holding commodities, which do not pay interest or dividends, increases. This can potentially lead to downward pressure on commodity prices. Conversely, when interest rates decline, the opportunity cost of holding commodities decreases, which can be supportive of commodity prices. In this case, there can be an inverse relationship between bond yields and commodity prices. _______________________ 📢Follow us here on TradingView for daily updates and trade ideas on crypto , stocks and commodities 💎Hit like & Follow 👍 We appreciate your support ! CryptoCheck _____________________ AMEX:SPY TVC:US10Y TVC:GOLD INDEX:BTCUSD COINBASE:BTCUSD BINANCE:BTCUSDT NYSE:GOLD CURRENCYCOM:GOLD
AMEX:SPY
by CryptoCheck-
29
US10Y - INMINENT SELL OFF US10Y - 10 YEAR BOND WEEKLY TENDENCY ANALYSIS THE 10 Year Bond Started Buying from Weekly Demand (green) Then reached Monthly Supply that generated a new/fresh weekly Supply to start reversing the price Destiny: Weekly demand (green) Stages/Weekly tendency - Stan Weistein - STAGE I: Price consolidate Between SMA 30 @ Weekly TF - STAGE II: Price break consolidation and make highs above SMA 30 @ Weekly TF - STAGE III: Price consolidate Between SMA 30 @ Weekly TF - STAGE IV: Price break consolidation and make lows below SMA 30 @ Weekly TF
TVC:US10YShort
by imktads
9
Inflation, Yields, and FOMC in Focus This WeekS&P 500 INDEX MODEL TRADING PLANS for MON. 06/12 The precarious rally of the last month has been baffling many with its lack of the breadth - the rally concentrated in just a handful of big-tech names. In the last trading plan - published on Thursday, 06/08 - we wrote: "If the rally does not dissipate this week, then it could be indicative of yet another leg up that could obliterate the shorts". The rally did NOT dissipate last week, but rather accelerated. With heavy economic calendar this week culminating in the FOMC rate decision on Wednesday, the focus will be back to the inflation and interest rates (potentially being confirmed as not a concern anymore, IF the FOMC pauses rate hikes as widely expected). Any concerns of potential recession seem to be not on the market radar for now. As can be expected, our models are flashing heightened probabilities for spikes in both directions, with no clear directional bias yet. As we first stated to start this week, if you are a bull, it may be prudent to take some profits off the table; if you are a bear, you might want to wait for confirmation of downside bias. Positional Trading Models: Our positional models indicate no trading plans for today, as they are in an indeterminate state. By definition, positional trading models may carry the positions overnight and over multiple days, and hence assume trading an instrument that trades beyond the regular session, with the trailing stops - if any - being active in the overnight session. Aggressive/Intraday Models: Our aggressive, intraday models indicate the trading plans below for today. Aggressive, Intraday Trading Plans for MON. 06/12: For today, our aggressive intraday models indicate going long on a break above 4323, 4305, or 4275 with a 9-point trailing stop, and going short on a break below 4320, 4302, 4297, 4290, or 4270 with a 9-point trailing stop.  Models indicate explicit short exits on a break above 4314, 4299, or 4293. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 10:46am ET or later. By definition the intraday models do not hold any positions overnight - the models exit any open position at the close of the last bar (3:59pm bar or 4:00pm bar, depending on your platform's bar timing convention). To avoid getting whipsawed, use at least a 5-minute closing or a higher time frame (a 1-minute if you know what you are doing) - depending on your risk tolerance and trading style - to determine the signals. (WHAT IS THE CREDIBILITY and the PERFORMANCE OF OUR MODEL TRADING PLANS over the LAST WEEK, LAST MONTH, LAST YEAR? Please check for yourself how our pre-published model trades have performed so far! Seeing is believing!)  NOTES - HOW TO INTERPRET/USE THESE TRADING PLANS: (i) The trading levels identified are derived from our A.I. Powered Quant Models. Depending on the market conditions, these may or may not correspond to any specific indicator(s). (ii) These trading plans may be used to trade in any instrument that tracks the S&P 500 Index (e.g., ETFs such as SPY, derivatives such as futures and options on futures, and SPX options), triggered by the price levels in the Index. The results of these indicated trades would vary widely depending on the timeframe you use (tick chart, 1 minute, or 5 minute, or 15 minute or 60 minute etc.), the quality of your broker's execution, any slippages, your trading commissions and many other factors. (iii) These are NOT trading recommendations for any individual(s) and may or may not be suitable to your own financial objectives and risk tolerance - USE these ONLY as educational tools to inform and educate your own trading decisions, at your own risk. #spx, #spx500, #spy, #sp500, #esmini, #indextrading, #daytrading, #models, #tradingplans, #outlook, #economy, #bear, #yields, #stocks, #futures, #inflation, #recession, #fomc, #fed, #fedspeak, #softlanding
SP:SPX
by TradersAICorp
$DXY - A Big Range (100.8 - 105.9) - The Dollar Index TVC:DXY has a very interesting short to mid term time frame ahead regarding its Price Action and Decision Making Time ticking . Currently TVC:DXY is bouncing around a Big Middline S/R area of 100-106 Range. Both 'ANIMALS' have their fair share of Case, while for now, Bulls are more dominant on medium term while Bears have taken total control of short term *Hourly Time Frames by CHoCH impulsively and having a realif bounce (completion of Wave (Bulls) - - -> Break out & Retest + Bull Flag formation pattern post break-out (Bears) - - - > Fakeout ; Wave C Headed Lower
TVC:DXY
by Mr_J__fx
US10Y: Prepare for a long term sell.The US10Y continues to trade inside the long term Channel Down since the October 21st High and has now formed the same peak formation as then. With the 1D time frame neutral (RSI = 45.126, MACD = 58.593, MACD = -0.280), the conditions have emerged for a new long term sell. If the previous -20% decline is repeated, then target the bottom of the Channel Down on a TP = 3.100. Prior idea: ## If you like our free content follow our profile to get more daily ideas. ## ## Comments and likes are greatly appreciated. ##
TVC:US10YShort
by InvestingScope
7
$DXY & Yield calls were on point, again. Banks ok for now?We post a lot of ANALYSIS with ideas & what we're seeing BUT Keep an eye out for the ACTUAL CALLS We called rally in TVC:DXY & #yields, we got that over last month + Recently we stated that #bonds likely found a bottom = yields topping & Stated that TVC:DXY was looking weaker #Dollar cratering & Yields falling This COULD save, at least for now, another wave of bank collapses TVC:TNX might be lil tougher call as the bounce was not as big
TVC:DXY
by ROYAL_OAK_INC
TLT Poised for Promising Gains 🚀💰Name: TLT - iShares 20-year bond ETF Time Frame: 15mins, daily chart Direction: long Comment: I have a promising investment opportunity to share with you. After careful analysis, I believe interest rates have reached their peak, indicating a favorable outlook for bonds. In particular, the iShares 20-year bond ETF (TLT) is exhibiting all the right signs for potential gains. TLT is currently forming a solid technical stage one base, suggesting a strong foundation for future growth. Moreover, there's an encouraging development as the 50-day moving average (50DMA) is crossing over the 200-day moving average (200DMA) on the daily chart, signaling a bullish trend. While it's essential to support his fundamental view with technical confirmation, the prudent approach would be to wait for TLT to surpass the $108 level before considering a long position. This breakout would indicate a significant upward momentum. Considering these factors, TLT presents an enticing investment opportunity for those looking to capitalize on the potential rise in bond prices. Keep a close eye on TLT and wait for the breakout above $108 to potentially join the long side. I am personally buying now and after breaking 108.83 I will buy more aggressively. ------------------------------------------------------------------------------------------------------------------------------------------------ Remember, this contribution serves as an informative analysis and should not be construed as financial advice. Stay informed, stay connected, and happy investing! 🌟📈 ------------------------------------------------------------------------------------------------------------------------------------------------ 💼💰❤️ Trade like a pro, laugh all the way to the bank! Like and subscribe for more money-making !" 💼💰❤️
CAPITALCOM:TLTLong
by michaelmolek
The Overnight Reverse Repo Facility Looks to be Breaking DownMoney that is being parked at the Feds Reverse Repo Facility due to attractively high interest rates the fed has set for money parked at the facility has been on a steady decline since late 2022 and we have now confirmed a lower high and are looking to break down below a Bearish Dragon trend line that could be the initial trigger that gets it started to going down all the way to an 88.6% retrace or lower even. One can only speculate that the money exiting this facility will lead to more trading of short term debt on the open market, which could eventually lead to yields coming down overall and for all of this excess liquidity to chase Equities instead as the value of the US Dollar declines due to the shock of all this newly added supply of liquid cash to the open market thereby causing a loosening of market conditions.
FRED:RRPONTSYDLong
by RizeSenpai
US10Y Approaching the top of the Channel Down. Sell opportunity.The U.S. Government Bonds 10YR Yield (US10Y) is approaching the top of the (blue) Channel Down pattern, which was our bullish target on our last trade ten days ago (see chart below): Despite not having hit it yet, we decide to close this long trade as we see more value in starting a sell-near-highs approach now. There is also a diverging Channel Down (dotted lines) involved and the maximum technical top that the price can make without breaking any pattern is the top of the Rectangle (4.090% Resistance). That will be our 2nd and final sell entry. Pay attention to the 1D RSI also, which is approaching the overbought barrier (70.00) just like on February 21. Our bearish strategy targets the May 04 Low at 3.300%. ------------------------------------------------------------------------------- ** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! ** ------------------------------------------------------------------------------- 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
TVC:US10YShort
by TradingShot
11
Sovereign Debt Crisis - Cracks Showing in the Yen?Long position on OANDA:USDJPY Interest rates on US dollars are rising globally, at a very rapid rate. Capital has been flowing towards the United States for the last couple years, as a global flight to security occurs as fear rises in markets during times of turmoil. Because the US Dollar is the reserve currency of the globe, debts backed by US Treasuries are quickly becoming expensive - particularly for sovereigns. Sovereign debt, particularly long-tenor notes and bonds, have demonstrated to be very illiquid in the last decade. Globally, central banks have attempted to combat this issue with lower interest rates and quantitative easing. This theory, however is fundamentally flawed since it does not address the lack of price discovery in these markets. Central banks can support these markets domestically, but without a foreign buyer they hold little value, and the currency will experience inflation relative to other currencies. In this instance, this is the US Dollar. See this chart of the British 10-Year Bond (Gilt) Futures, where there was a panic in the market a few months ago as pension funds holding large quantities of Gilts were rendered insolvent. The same pattern can be observed on a USDGBP chart, as capital fled the nation and its debt lost value (rates rise). The crisis that nations now face, is that they are burning the candle at both ends. Japan has been employing strict interest rate controls, and extraordinary liquidity-providing measures to domestic banks for decades to stimulate inflation. In the past couple months however, they have begun to employ currency controls, to curb the loss of value of the Yen in FX markets. Despite this inflation they have had little success stimulating growth domestically. Negative rates reflect a negative demand for sovereign debt, as if the entity "buying" it must be paid to do so. Rates have also gone negative in Europe, see the financial capital, Germany, has struggled since 2009 to find a market for its debt. US banks are reluctant to lend via repo to European banks for their sovereign entities possess such great risk The Reverse Repo facility (RRP) has become a black hole for capital around the globe. During QE it offered the highest return on cash for money-market funds and other money market participants. As rates rise globally, so too does risk. As markets like Europe are unable to keep up with the rise in rates as is occurring in the United States, so capital will continue to flee these nations under duress and create a feedback loop. The RRP is a zero-risk investment, so offers a safe home for flighty capital looking to liquidate long-term debt. See chart of Yen, inverse Euro and RRP usage The Bank of Japan has become unable to control the market on its 10-year debt security, and it will continue to rise and push against the imaginary "ceiling" imposed on it, until a currency crisis occurs and a crisis in sovereign debt markets may begin to be realised. Capital will flow very quickly towards the United States in this event. Since it is the financial capital of the world still, as it is the reserve currency of most foreign governments, any assets priced in US dollars will grow in value. Particularly equities, this will be a theme in markets over the following years. War in Ukraine will continue to create massive inflationary pressure globally, as capital concentrates around a very expensive and complicated geopolitical conflict. Rates will continue to rise until this is resolved, and sovereign debt will quickly become un-affordable as the price falls due to rate increases. Debt is already concentrating in short-term debt markets, like REPO, FIMA, SOFR and so on. Pension and mutual funds will quickly be rendered insolvent as they are the parties which hold gigantic quantities of these dangerously illiquid bonds. BEWARE of these markets, they are a ticking time bomb and all global currencies have a massive exposure.
Long
by FPS_Denny
1
Ten Year Notes (ZN) May Find Support SoonShort term Elliott Wave view in Ten Year Notes (ZN) suggests that cycle from 3.24.2023 high is in progress as an expanded flat. Down from 3.24.2023 high, wave ((A)) ended at 113’3 and wave ((B)) ended at 117 as the 45 minutes chart below shows. The Notes then extends lower in wave ((C)). Internal subdivision of wave ((C)) is unfolding as a 5 waves impulse Elliott Wave structure. Down from wave ((B)), wave 1 ended at 116’09 and wave 2 ended at 116’12. The Notes extends lower in wave 3 towards 115’13, and wave 4 rally ended at 115’29. Final leg wave 5 ended at 115’01 which completed wave (1). The Notes then corrected in wave (2) which ended at 116’16. Internal subdivision of wave (2) unfolded as a zigzag Elliott Wave structure. Up from wave (1), wave A ended at 115’31 and pullback in wave B ended at 115’24. Wave C higher ended at 116’16 which completed wave (2). The Notes then extends lower in wave (3). Down from wave (2), wave 1 ended at 115’05 and rally in wave 2 ended at 115’18. The Notes then extends lower in wave 3 towards 113’04 and rally in wave 4 ended at 113’25. The Notes should soon end wave 5 of (3), then it should rally in wave (4) to correct cycle from 5.11.2023 high before it resumes lower. Near term, as far as pivot at 117 stays intact, expect rally to fail in 3, 7, or 11 swing for further downside. Potential target lower is 100% – 161.8% Fibonacci extension of wave ((A)). This area comes at 111’31 – 113’28 where buyers can appear for 3 waves rally at least.
CBOT:ZN1!
by Elliottwave-Forecast
SG10Y Govt Bond and SPY relationship Part VI - Bear for EquitiesAs mentioned in previous heads up over the last weeks, it had finally happened (as expected) that the SG10Y GB yield rates break out of trend line resistance. And from previous occurrences, this is a very reliable inverse leading indicator of the SPY (and other related equity indexes); meaning that the SPY should be tanking downwards within the next week or so. Enough said, pattern recognition checked, trend correlation checked, projection based on hypothesis checked... now the rubber hits the road. Not expecting any deviation from the correlation, so is very likely that equities should be tipping over in a bearish slide. HEADS UP!
TVC:SG10Y
by Auguraltrader
US 10Y TREASURY: 4% is far away?The US Treasury yields were under influence of Fed Chair Powell's speech in Washington as well as ongoing negotiations regarding the debt-ceiling. Although Powell did not mention anything new in his speech over a potential monetary move in the future period, still, Lorie Logan, a Dallas Fed President, made a comment as of the end of the previous week, that monetary data are still not justifying the halt in Fed's rate hike. Market reaction was imminent, so the 10Y Treasuries surged by 7 bps to the highest weekly level at 3.72%. Still, yields are finishing the week around short-term support at $3.6%. As long as insecurity in markets holds, and further rate hikes are not clearly communicated with the market, it could be expected for 10Y Treasuries to be elevated. The major resistance line at 3.6% has been breached on Friday. This means that the market will start week ahead by testing this level for some time. On the other hand, news on the debt-ceiling negotiations would certainly have an impact on Treasury yields, which might bring some volatility back on the market. On the opposite side, a clear break of 3.6% resistance has opened a way for a 4% next resistance. It should not be expected for this level to be reached in the week ahead, but in case that Fed continues with rate increases, a 4% might easily become the next target.
TVC:US10Y
by XBTFX
If U.S. Treasuries Default: Market and Bitcoin Implications Authors: SanTi Li, & NaXi Da U.S. Treasury yield, long considered as a risk-free rate (R0) for value computations and future valuations as per materials like the CFA curriculum, bears nearly zero risk in the financial landscape. However, what happens if this supposedly risk-free asset becomes risky? A U.S. Treasury default would have vast ramifications on the global economy and financial markets. Let's analyze the potential impacts on liquidity, the U.S. dollar value, and Bitcoin's value: Liquidity: U.S. Treasuries, globally accepted as secure assets, constitute the cornerstone of the global financial system. A U.S. default could lead to a confidence crisis in U.S. Treasuries, prompting large-scale selling and potentially a liquidity crisis. This crunch could trigger a plunge in asset prices, escalate financial market volatility, and exacerbate the global financial crisis. U.S. Dollar Value: The U.S. dollar remains the world's primary reserve currency. A U.S. Treasury default could erode global confidence in the dollar, depreciating its value. Still, a market panic might trigger asset sell-off, driving the dollar demand up. Simultaneously, investors could seek refuge in other 'safe haven' assets such as gold or other strong currencies, mitigating dollar depreciation to some extent. Bitcoin Value: The secondary market value of Bitcoin is influenced by numerous factors, including market sentiment, consensus, BRC standard popularity, attitudes of governments, regulatory policies, technological developments, and application convenience and degree. If a U.S. default occurs, Bitcoin might respond in two disparate ways: ● Positive Impact: If investors look for non-traditional 'safe haven' assets like gold and silver, and the world requires a new, relaxed reservoir to absorb decompressed funds, Bitcoin's demand and value might increase in the medium to long term. ● Negative Impact: Bitcoin's high volatility and risk could drive investors away during market panic, decreasing its value. Therefore, Bitcoin's reaction would largely depend on market sentiment and investor risk appetite. Implications on the Global Economy and Trade: A U.S. Treasury default could precipitate a global recession, or even a deeper economic crisis. It could also impair the credit of the U.S. dollar, disrupting global trade. Exporters to the U.S. might face diminished orders, while importers of U.S. goods and services might encounter higher prices. Potential Restructuring of the Global Financial System: A U.S. default could lead to a reevaluation of the dollar-based global financial system, potentially allowing other currencies, especially the yuan, to play a more prominent role in the future global financial system. This could also fast-track the global acceptance of digital currencies and blockchain technology. Risk Assets Value Volatility: A U.S. bond default might result in significant volatility in the value of risk assets such as stocks, commodities, cryptocurrencies, and emerging market assets. In theory, three scenarios could lead to a U.S. bond default - debt ceiling issues, government shutdown, and policy errors. However, extreme 'black swan' scenarios such as external shocks and political conflicts could also lead to default. In conclusion, while a U.S. default is highly unlikely, if it occurs, it would have a profound impact on the global financial system. Despite initial potential negativity towards emerging digital industries like blockchain and cryptocurrencies, they may encounter new opportunities in the long run. This would especially be the case if the U.S. dollar's status as a settlement currency is challenged. This could increase demand for Bitcoin and accelerate the transformation of global trade methods. However, it is critical to note that the thoughts expressed above are intended for long-term thinking, discussion, and learning, and should not be construed as investment advice. However, the probability of an event with a similar magnitude happening is not necessarily low. The exact timing and suddenness of such events are difficult to predict, hence the importance of having risk control and defensive mechanisms in place to be prepared for any situation. Twitter: @santili1021
by OuChiBoy