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📈 Crypto Market Forecast 📈
It’s going to be an interesting week. That’s because the macro and crypto backdrops both look like they’re going to be mixed. On the macro front, the big story is the conflict between Iran and Israel, which seems to have been put on pause. What’s fascinating is that Israel reportedly agreed to end the war in Gaza within two weeks if the US struck Iran for them.
In other words, it’s possible that the escalation between Iran and Israel was part of larger negotiations, and not just with Israel. Consider that Iran is one of China’s major oil suppliers. Now consider that the US has reportedly signed a trade deal with China. Some would say the timing is a coincidence. Others would say it’s a result of China worrying about its Iranian oil supply if the conflict between Iran and Israel had continued, something the US could have easily allowed to happen.
In any case, the key takeaway is that the tensions in the Middle East seem to have taken a U-turn, and we could be seeing something similar with the tariffs. In case you missed the news, the Trump administration is reportedly considering delaying the tariff deadline again. For context, the tariffs were supposed to be finalized by July 8-9. It’s not clear what the new date is.
The most significant pivot, however, seems to be coming from the Federal Reserve. Last week, Fed chairman Jerome Powell seemed a lot less hawkish than usual. Although he said the Fed would continue to take a wait-and-see approach, he noted that the Fed could start cutting if inflation continues to fall over the summer, and even said that the current level of rates is restrictive.
While the mainstream media claims that the subsequent drop in bond yields and the DXY was due to Trump’s rhetoric around replacing Jerome, it’s arguably clear to see that the drop happened as a result of Jerome’s dovish testimony. Then again, it could have been the softer-than-expected jobs data, the weak GDP revision, or even a combination of all the above.
Regardless of the cause, the outcome is the same - bond yields down, DXY down. Historically speaking, this is a bullish macro backdrop for crypto, because both result in an increase in global liquidity. The caveat is that it takes time for this liquidity to flow into crypto. Estimates on exactly how long this lag is vary, but it’s likely to be a few weeks at the very least.
As it so happens, this improving macro backdrop lines up perfectly with the long list of crypto catalysts we’re likely to see in the coming weeks. For starters, World Liberty Financial’s $WLFI token will soon become tradeable according to a recent announcement. This will increase the attention being paid to crypto for better or for worse, particularly when the protocol itself goes live.
It’s also easy to forget that the SEC is working on a temporary exemptive order that would basically make everything in crypto legal in the US for a limited time. The SEC has not specified when this exemptive order will occur, but most crypto projects are eagerly waiting for it to be enacted. Chances are this is when we’ll see protocols like World Liberty Financial launch.
Meanwhile in Congress, the House is expected to vote on the GENIUS Act in the coming weeks now that it’s been passed by the Senate. Some House politicians are saying they’ll pass the GENIUS Act if it's accompanied by the CLARITY act. For reference, the House has its own competing stablecoin regulation called the STABLE Act. The CLARITY act is for other cryptos.
At the same time, White House AI and Crypto Czar David Sacks said that the GENIUS Act will become law sometime in July, with the CLARITY becoming law by the end of September. When you combine these bullish crypto catalysts with a bullish macro backdrop, it paints a bullish picture for the summer, but there could still be another couple weeks of chop first.
That’s simply because the conflict in the Middle East could potentially restart, as could the uncertainty around the tariffs ahead of the initial July 8-9 deadline. As the saying goes though, bull markets tend to climb a wall of worry, and the proof can be seen in the slow melt up in stocks. It’s possible we will start to see crypto follow suit in the next couple of weeks. 0 reply
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