How Fed Rate, U.S. Economy, and Inflation Affect Crypto Prices | Webcast 49 | BitPinas

The effects of this year’s much-awaited Bitcoin halving were surprising. Historically, Bitcoin halving has driven bullish performance in the crypto market. However, this year, the market experienced a downturn with depressed prices days after the halving event.

To better understand the factors influencing the market’s performance, the BitPinas Webcast invited Josep Lejarde, also known as The Whizkid Trader, and Dell Omasas, Philippines Lead at ViaWallet and Coinex Wallet.

About the Guests

Lejarde is not just a simple content creator; he is a distinguished analyst with multiple certifications. He first learned about BitPinas during the popularity of Axie Infinity in the country, where BitPinas was at the forefront of covering the #CryptoPH industry. Lejarde began cryptocurrency trading in 2019 at the age of 15. 

As of this writing, Lejarde is a Certified Technical Analyst (CTA) from the Society of Technical Analysts, a Certified Treasury Professional (CTP) from the Ateneo Graduate School of Business – Bankers Association of the Philippines, and a Certified Securities Specialist (CSS) from the Ateneo Graduate School of Business.

“14 years old ako that time, ang Bitcoin noon noon ay $20,000. Doon ako nagkaroon ng curiosity about cryptocurrency trading. I was curious after that. Doon ako nag-start mag-research, paano mag-trade,” he shared. 

Meanwhile, Omasas started crypto trading in 2016 when he was in Malaysia. He began farming airdrops in 2018 and started working with Via BTC in 2020.

The Factors That Affect The Current Market

According to Lejarde, the market downturn after the halving is due to several factors. Historically, price increases do not happen immediately after the halving; it typically takes months. He emphasized that corrections and consolidations usually occur before the bull run.

For the first halving in 2012, the macro factors affecting the crypto market included the U.S. presidential election, the Eurozone debt crisis, and the Federal Reserve printing a lot of money. “Ang nangyari noon, dahil mababa ang interest rate ng FED, ang mga traders ay bumili ng assets. Nakinabang doon ang BTC, kaya tumaas ang market.”

For the second halving in 2016, the Chinese economy slowed down, the U.S. had its presidential election, and the FED maintained low rates. “Nakinabang din ang BTC noon kasi the interest rate is still low, kaya na-timing na maganda ang performance ng market.”

For the third halving in 2020, For the third halving in 2020, another U.S. presidential election happened, but since the COVID-19 pandemic also occurred, inflation spiked because the FED printed a lot of money. “Nagkaroon ng flooding of money that time, kaya maganda ang resulta ng halving na iyon. Syempre, ikaw na maraming pera, bibili ka ng asset, kaya nagkaroon ng stampede, lumipad yung crypto that time, yung bull market.”

However, for the recent fourth halving, although the inflation rate is high and Bitcoin ETFs received approval, no positive trend was recorded. “The sad part here is natapat ang fourth halving sa magulong macroeconomic environment. Na-timing na tumataas ang mga bilihin at nagkakaroon ulit ng inflation spike.”

“There is a correlation, kapag mataas ang interest rate, bumabagsak ang crypto market.” 

Note: From 32:00 mark, Lejarde explained through a graph how ‌interest rates affect the performance of Bitcoin.

“Bakit bumagsak noong halving? Kasi nag-panic na yung market, na baka magkaroon na naman ng interest hike ang FED. That is why uncertain pa rin ang economic data right now, kaya ang pananaw ng investors ay for observation muna,” Lejarde added, explaining that the market is like the “Marites,” where its performance will be based on potential news or “chismis.” 

How Important is the U.S. Economy to the Crypto Market? 

Based on Lejarde’s analysis, the crypto market heavily relies on the Federal Reserve’s interest rate decisions. The FED is the central bank of the U.S. “The nature of Bitcoin is to beat the U.S. dollar. When the U.S. dollar is going down, iyan ang nagiging factor natin to buy $BTC. Ang titignan kasi natin jan, the more na bumabagsak ang U.S. economy, the more na pumapabor sa atin sa crypto trading world,” he explained.

“Not all the news ay kailangan niyong intindihin. Alamin natin ang nature ng kalaban, the U.S. dollar. Alam nating there is a cycle for crypto market, kaya dapat lagyan ng timing ang entry (sa pagbili ng $BTC) by reading the economic data ng U.S.”

The Relationship Between the Unemployment Rate in the U.S. and the Crypto Market 

During the webcast, the U.S. Nonfarm Payrolls and the U.S. Unemployment Rate were released. Lejarde stressed that the data for nonfarm payrolls went down while the unemployment rate went up, thus, the reason for the pump in the market. “Ang titignan natin dito, what’s the logic behind the numbers, ano ba yung implication nito sa market,” he highlighted.

“Kung bumaba ang sweldo, bababa ang bibili; pag bumaba ang bibili, hihina ang business; pag humina ang businesses, bababa ang economy. Dahil bumagsak ang payroll, iisipin ng investors to sell the dollars, kaya nag-pump ang crypto.”

“Dahil bumaba ang payroll, i-expect natin na magkaroon ng relief ang crypto market, baka tumaas.”

What is the Most Effective Strategy to Be Used in BTC Trading? 

“Ang pinaka-efficient strategy na ginagamit namin is yung Elliott Wave Principle. Kasi nga, ang Elliott Wave Principle is basing more on emotions, kasi emotions form into patterns, and patterns form into rules,” Lejarde answered.

“Sa Elliott Wave Principle, natuturuan ka na mag-relax, maghanap ng magandang entry or exit.”

‘Sell in May and Go Away and Buy More in July’: Is It Still Applicable?

“Yes, it is still applicable. Pwedeng half of the month of May bullish, pwedeng yung half ay bearish. Dapat balanse ang approach. Algorithm na ng market na mag-sell-off pag May,” Lejarde explained.

Aside from May, another sell-off month is also September for crypto. Meanwhile, the price of gold pumps in August, according to the trader. Lastly, every Q4 of the year, the crypto market is usually bullish. “Seasonality matters too, nag-umpisa ito sa stock market, then in-adopt na rin ng crypto market.”

Lejarde’s Tip on Emotional Traders

Admittedly, there are crypto traders who are too emotional. Once their portfolio turns negative, they will immediately sell their assets and exit their trading practice. “Normal pong maging emotional. Pero learn to set limit or boundaries sa losses mo. Mag-allocate ka at dapat may certain limit ka lang ng talo. Let’s say, $200, dapat ang accepted mo na loss ay nasa $20. Take the risk or lose the chance?” Lejarde advised. 

CONCLUSION

To help you understand Lejarde’s tips about the relationship of the crypto market to other factors, here is a summary:

Factor	Crypto Market Performance
FED’s High-Interest Rate	Bearish
FED’s Low-Interest Rate	Bullish
More Printed Money	Bullish
High Inflation	Bearish
Low Inflation	Bullish
Poor U.S. Economy	Bullish
Weak U.S. Dollar Performance	Bullish
Decreased U.S. Nonfarm Payrolls	Bullish
Increased U.S. Unemployment Rate	Bullish
Fourth Quarter of the Year	Bullish

This article is published on BitPinas: How Fed Rate, U.S. Economy, and Inflation Affect Crypto Prices

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