This Week’s Top Headlines

i) Bitcoin whipsaws wildly between $26,500 to $28,800 and has struggled to break through the $29,000 resistance as investors begin to take profits. The crypto market sentiment remains at greed despite bearish macro factors.

ii) The Federal Reserve sticks to expectations with a 25 basis point hike and indicates that rate increases are nearing an end. Chairman J. Powell reassures that America’s banking system is "sound and resilient."

iii) Expert insights on the recent banking crisis - a summary of our recent Twitter space session with economist Sani Hamid and RinggitPlus founder Hann Liew.

*This week’s newsletter has been segregated into two parts to better represent the separate topics. Part I focuses on (i) and (ii) while part II will cover the expert insights on the banking crisis. Patrons will receive part II by Monday (Mar 27).

Scroll down to read the details.

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Bitcoin’s spectacular volatility continues

Bitcoin’s performance in the past two weeks has been nothing short of impressive. After rallying by an astonishing 46.11% from a low of $19,500 to $28,800, the world’s largest cryptocurrency is currently taking a breather at $27,500, having struggled to break through the $29,000 mark on Thursday.

From the hourly chart below, you can see the ups and downs in the markets this week. Bitcoin whipsawed wildly between $26,500 and $28,800, experiencing a 15% swing in value in just a couple of hours.

The Fear and Greed index, which tracks the current sentiment of investors, is still hard stuck at greed.

It’s been almost two weeks since the sentiment was last at fear, indicating that a retracement is likely in the upcoming days.

The Federal Reserve sticks to expectations with ninth consecutive rate hike

On Thursday (Mar 23), the Federal Reserve raised the benchmark interest rate by 25 basis points, bringing it to a range of 4.75-5% - the highest level since 2007.

This marks the ninth consecutive rate hike from the Fed, but despite the unprecedented pace of tightening, Fed Chairman J. Powell said that the path of getting inflation back down to 2% “has a long way to go and is likely to be bumpy.”

“If we need to raise rates higher, we will,” he added.

On the topic of rate cuts, Powell stated that reducing interest rates “are not in our base case” for the remainder of 2023.

Markets reacted negatively upon the news, with Bitcoin plunging by almost 8% in a few hours, from $28,800 to $26,500. The S&P 500 index, meanwhile, tanked by over 2.50%.

However, both assets rebounded surprisingly quickly after the initial dip. Bitcoin attempted to test the $28,800 mark once again but failed to break through.

Fed says the US banking system is “resilient” while hinting at pausing rate increases

In light of the recent banking crisis, which saw three US banks collapse in the span of less than two weeks, the Federal Reserve reassured Americans that the US banking system is "sound and resilient" and that it will use "all of our tools" to keep banks safe.

In its latest FOMC statement released after the press conference on Thursday, the Fed also hinted at a strong signal that the US central bank is close to pausing rate hikes.

The tone has shifted dramatically, with crucial descriptions being removed, such as:

• "Inflation has eased somewhat but remains elevated." - February FOMC statement.

• "Inflation remains elevated." - latest FOMC statement.
  

• “The Committee anticipates that ongoing increases in the target range will be appropriate,” - February FOMC statement.

• “The Committee anticipates that some additional policy firming may be appropriate.” - latest FOMC statement.

The Ukraine war and its effects on inflation have also been omitted entirely and replaced with "the U.S. banking system is sound and resilient."

The statement had a huge impact on the projections of upcoming rate hikes from the Federal Reserve. Investors are now expecting just one more 25 basis point hike this year, which will bring the benchmark rate to 5-5.25%.

The US dollar eased 1.26% against the ringgit after the FOMC statement was released.

That’s all for part I of this week’s newsletter!

Part II, which will cover the expert insights on the banking crisis, will be sent to all patrons by Monday (Mar 27). Stay tuned!

Disclaimer: I am not a financial advisor. This newsletter is based on my own analysis and research. Do not take any of it as financial advice.

*This newsletter was written at 10.30 AM on 26 March 2023 and completed at 3.30 PM the same day. To get early access to our newsletter, be our patron for as little as $1/month!