‘A Positive Catalyst’: Bitcoin Price Now Bracing for Huge $180 Billion Fed Bomb

Bitcoin
BTC
it has leveled off since its July rally that sent its price convincingly above $20,000, even as the market braces for an earthquake that “comes closer every day.”

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Still down nearly 70% from its all-time high as lawmakers ponder bitcoin’s future, bitcoin’s price is still reeling from several cryptocurrency industry crashes that have triggered dire warnings that some other cryptocurrencies Important ones could fail.

Now, the bitcoin and cryptocurrency market is keeping an eye on the upcoming release of the US consumer price index (CPI), due on Wednesday, which could mean the Federal Reserve is scaling back its interest rate hike. planned at their September meeting.

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“A decline in inflation could mean that the Fed could reduce its rate hike since the September meeting,” Yuya Hasegawa, a bitcoin and crypto markets analyst at Bitbank, wrote in emailed comments.

This week, the latest US employment report showed that employment rose more than twice as expected, which somewhat dimmed the possibility of a Fed U-turn after the US recorded two consecutive periods of economic contraction, a technical indicator of a recession.

“Of course the market isn’t fully convinced of that yet until they see the CPI for July, which is due next Wednesday, but inflation is likely to ease in July due to lower oil prices, and it’s likely to Bitcoin benefits from the expectation for a slower rate hike.”

The Federal Reserve has been battling runaway inflation this year, embarking on a series of historic interest rate hikes and scaling back its massive pandemic-era stimulus measures that have weighed heavily on bitcoin, cryptocurrency markets. and actions.

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“If the Fed really blinks and backs off raising rates at their projected pace, the market would likely take that as a positive catalyst,” Cumberland, a Chicago-based market maker, wrote in a report that surveyed investors. They predicted the bitcoin price will recover to $32,000 this year, which could add $180 billion to bitcoin’s market capitalization.

“It’s fascinating that even after a sell-off, at a time when the market motto had been to risk everything, the average respondent was still extremely bullish.”

Cumberland analysts see a strong possibility that the Fed will scale back its aggressive program in the coming months.

“From our point of view, this is not that far-fetched; the shape of the forward curve already predicts a possibility of rate cuts in 2023.”

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