Anabelle Martin
The bullish move in the price of bitcoin has been stymied by strong economic data that shows that the global economy is getting stronger and stronger.
Strong Economic Data Is Bad News For Bitcoin Bulls
The bullish move in the price of bitcoin has been stymied by strong economic data that shows that the global economy is getting stronger and stronger. However, the Fed’s attempts to curb inflation and the rise in the prices of oil, gasoline, and other commodities have been largely ineffective. In fact, we are likely to see inflation rapidly return below 3-4% in the near future.
Inflation will rapidly return below 3-4% in the next year
When inflation is at a high level, it is often the precursor to a recession. So, it is no surprise that the Fed has raised interest rates as they attempt to tame inflation.
However, if we take a step back and look at inflation in a larger context, we see that there are major differences among countries. Inflation is not the only metric of overheating. Supply and demand dynamics also contribute.
During the 1970s, the United States had the longest stretch of heightened inflation. For several years, inflation was in the single digits, and even low double digits. But as soon as President Nixon instituted a wage freeze, prices began to decline.
While the Fed has raised rates, it has also emphasized that the economy is slowing. It has acknowledged that it missed the inflation call in recent months.
The Fed has a mandate to maintain stable prices. That means that it cannot change the supply of goods in the short run. Consequently, price increases are a direct consequence of demand. And, as the Fed raises interest rates, it wants to discourage consumers from spending.
The Fed’s attempts to tamp down inflation are largely insubstantial
The Federal Reserve has been trying to tame inflation for years. It has hiked interest rates three times this year in an attempt to cool the economy. But it’s not the only factor driving cryptos higher.
For instance, the Fed’s decision to raise the rate by a quarter percentage point in September provided the crypto industry with some much needed optimism. However, there’s still a long way to go.
In fact, the Federal Reserve may be on the hook for a recession. As such, it’s unlikely that the Fed will be able to stop its monetary tightening train. Plus, the Fed may be forced to make more drastic moves when the recession hits.
On the other hand, the Fed’s attempts at tamping down inflation have been far less impressive than one might hope. To put it another way, the Fed isn’t likely to achieve its 2% inflation target in this economic climate.
Bitcoin bulls have been forced to unwind to avoid margin calls
The price of Bitcoin has fallen to its lowest point in nearly two years, and analysts are pointing to a variety of factors to explain its decline. While some have argued that the coin is hitting its support floor, others are more confident that it will recover in the coming months.
Some of the reasons why the price of bitcoin is falling include an increase in interest rates and an apparent liquidity crunch. For instance, the president of a digital asset management fund said that a spike in demand from “smart money” will help spur a substantial rally.
While the price of bitcoin is still above $20K, most analysts expect the coin to fall to at least $10K. As a result, many large institutional crypto bulls have been forced to unwind their positions. This has had the effect of driving prices down, though there is plenty of room for it to fall.
Stock futures are little changed on Sunday night as investors await more economic data
Stock futures were little changed on Monday evening, as investors await more economic data. As the week ends, a number of major companies are set to report earnings.
Among them are FedEx Corp and Nike. After the results of these reports are released, the market will take a closer look at the impact they had on the overall market.
Investors are worried about the state of the economy, with a stronger-than-expected economy forcing aggressive monetary policy moves from the Federal Reserve. This could have a negative impact on stocks.
The Dow Jones Industrial Average and the S&P 500 are expected to open higher on Wednesday. However, they’ll likely trade mixed for much of the day.
Some key events to watch on Wednesday include retail sales in Japan and industrial production in Spain. Also, there are a host of economic indicators, including the consumer price index (CPI). While CPI is expected to tick up, it’s also important to note that the core CPI is expected to be slightly lower than last month.
