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Start: May 23, 2023
"Sell in May and go away"
This is a series we will be doing throughout May, and it will feature diverse topics and points of view to see if this common saying has some wisdom to offer to us.
Today, we will be looking at the #InterestRates, and how they relate to #Bitcoin.
I should mention off the bat that we only have only 1 data point for this analysis, and that's the 2015-8 hikes that we saw.
Bitcoin hit its 2018 low 1 week before the FED finished hiking rates.
Then, it rallied in an impressive x4 rally in the next couple of months while the rates remained unchanged.
Side note: The 2018 rally topped off in June.
They remained unchanged until the economy started to become weaker, thereby forcing the FED to start to cut.
Bitcoin put in its 2019 high 1 week after the FED started to cut, and went down to ~4k in the following months.
And it put in that low in the exact week when the FED finished cutting.
Let's see where we stand today.
The pace at which the FED is raising is unprecedented, and that leads to a lot of problems.
Especially if you are raising into a slowing economy.
But despite that, we are currently rallying, even though it's still not evident if the FED is done.
Why is that?
Well, we cant say definitively, but one theory is that because of all of the pain the interest rates are causing, we are interpreting the pivot as the FED slowing down, as opposed to the FED stopping.
Thus, the 2019 rally has already happened. The markets front ran it.
But that doesn't mean that the economy is magically healed, just like how it wasn't healed in 2019.
Especially since the FED is predicting a "mild recession" in the latter part of 2023.
But hey, this is just a theory, and we also don't have much data to compare to, so don't take it for granted.
If you found this research insightful, please consider liking & retweeting.
Following doesn't hurt either, and you can always change your mind :)