Bitcoin (BTC) fluctuated around the key $20,000 mark on August 31, as the outlook for inflation in the United States darkened.
Data from Cointelegraph Markets Pro and TradingView showed that the BTC/USD pair fell back below the high of the last halving cycle overnight, only to later regain lost ground and hover around $20,300 on the day. day.
Range-bound moves accompanied modest rallies in US stocks, with the S&P 500 and the Nasdaq Composite Index up 0.15% and 0.6% in the first hour of trading, respectively.
However, concerns remain about the Fed’s plans to tackle inflation following last week’s gloomy speech by Chairman Jerome Powell.
Despite Powell’s earlier rhetoric, Diane Swonk, chief economist at KPMG, told the mainstream media that the entire concept of a “soft landing” for the US economy had been shelved.
Powell’s speech had, in fact, “buried the concept of a soft landing,” he explained to Bloomberg, and showed that the Fed instead planned to keep growth in check to “shred inflation.”
“It is a tortuous process, but less tortuous and less painful than an abrupt recession”Swonk added.
With the mood firmly conservative in risk assets, attention was also kept on the strength of the dollar, which is still hovering around twenty-year highs.
“For risky assets, including Bitcoin, a stable or weak dollar is essential as upward pressure on markets can be expected”, said Michaël van de Poppe, CEO of the trading company Eight Global, to his followers on Twitter.
“The next month is going to be big for $DXY. And this potential bearish divergence could be the first sign.”
Markets “on the dice table” due to the Fed’s rate hike
September, traditionally a “red” candle month for Bitcoin, also promised a pivotal Fed decision on key rate hikes, along with August data on Non-Farm Payrolls (NFP) and Retail Price Index inflation. Consumer (CPI).
Expectations favored a rise of 75 basis points, echoing that of Julyas CME Group’s FedWatch tool showed that day.
“Instead of looking at the broader rate path, or the terminal rate, markets are retrading the FOMC odds on 9/21: whether to go up 50 basis points or 75 basis points”trading firm QCP Capital told Telegram channel subscribers in its latest market update.
“Worse, Powell has effectively delivered this policy decision to the 9/2 NFP and 9/13 CPI – which basically means that investors are now all at the craps table, betting over or under. “
The additional push for a higher rate hike, QCP added, could come from the longer-than-normal gap between the July revision and the September one, thanks to the August lull.
Typically, rate hike decisions are made on a monthly basis.
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