The cryptocurrency community is watching three key dates this month that could have a profound impact on the trajectory of the cryptocurrency market and the broader macroeconomic environment in the United States this year..
On July 13, the monthly Consumer Price Index (CPI) and related inflation data will be released to the public. On July 26 and 27 it will be decided whether to raise interest rates further, while on July 28 the estimates of the Gross Domestic Product (GDP) of the United States for the second quarter of 2022 will tell us if the country is in a technical recession.
July 13: inflation marker, CPI
Michael van de PoppeCEO and founder of cryptocurrency consulting and educational platform EightGlobal, told his 614,300 Twitter followers on Monday that “all eyes are on next week’s CPI data,” adding bullish forecasts for Bitcoin (BTC) should it break above its $20,000 price point..
Blurry chart, but would be looking at $28K for #bitcoinif there’s a chance that $20K can be flipped (and in between I’d be monitoring $23K).
All eyes on the CPI data next week and the FED, but it would make sense. pic.twitter.com/pcWwEmkoHT
— Michael van de Poppe (@CryptoMichNL) July 4, 2022
Fuzzy chart, but I’d be looking for a $28,000 price for bitcoin, if there’s a chance of the $20,000 level reversing (and in the meantime, I’d be monitoring the $23,000 level). All eyes will be on next week’s CPI data and the Fed, but it would make sense. pic.twitter.com/pcWwEmkoHT
The co-founder of The Crypto Academy, known on Twitter as wolves of crypto, told them his followers to keep an eye on the date, adding that the lower-than-expected CPI “could be the catalyst for a dead cat bounce” for bitcoin:
“All eyes will be on the CPI numbers on July 13. If the IPC is lower, it will be the catalyst for a dead cat rebound.”
The CPI is one of the reference points to gauge the evolution of inflationsince it measures the average change in consumer prices based on a representative basket of household goods and services.
The continued rise in inflation could affect the demand for cryptocurrencies, as consumers may have to spend more than before to get by.
Curiously, While bitcoin was created amid high inflation following the 2008 global financial crisis, and was touted as an inflation hedge due to its fixed supply and scarcity, in recent years the cryptocurrency has performed similarly to that of traditional technology stocks, being less resistant to inflation.
The next scheduled release of the CPI is expected on July 13, 2022by the United States Bureau of Labor Statistics.
According to Trading Economics, the current consensus June inflation rate, or CPI, is 8.7%, up slightly from 8.6% in May.
July 26-27: Fed interest rate hike
After raising interest rates by 75 basis points in June, one of the largest monthly increases in the last 28 years, interest rates are expected to rise further after the Federal Open Market Committee (FOMC) meeting later this month.
Interest rate hikes are one of the main tools used by the US Federal Reserve and Central Bank to manage inflation by slowing down the economy. Rising interest rates cause higher borrowing costs, which can discourage spending and borrowing by consumers and businesses.
It can also put downward pressure on the prices of riskier assets such as cryptocurrencies.as investors can start earning decent returns just by keeping their money in interest-bearing accounts or low-risk assets.
This month, the FOMC is expected to decide whether to impose a hike of 50 or 75 basis points.. Charlie Bilello, founder and CEO of Compound Capital Advisors, bet on the higher amount.
Fed rate hike expectations at next 4 FOMC meetings…
-July: 75bps hike to 2.25%-2.50%
-Sep: 50bps hike to 2.75%-3.00%
-Nov: 50 bps hike to 3.25%-3.50%
-Dec: 25bps hike to 3.50%-3.75%— Charlie Billello (@charliebilello) June 28, 2022
Expectations of the Fed rate hike in the next 4 FOMC meetings…
-July: Increase of 75 basis points to 2.25%-2.50%.
-September: rise of 50 basis points to 2.75%-3.00%.
-November: rise of 50 basis points to 3.25%-3.50%.
-December: rise of 25 basis points to 3.50%-3.75%.
July 28: Are we in a recession?
On July 28, the US Bureau of Economic Analysis (BEA) will release an advance estimate of US GDP for the second quarter of 2022.
After registering a GDP decline of -1.6% in the first quarter of 2022, the Atlanta Fed’s GDPNow tracker now expects a -2.1% decline in GDP growth for the second quarter of 2022.
A second consecutive quarter of falling GDP would place the United States in a “technical recession”.
Should the US economy be officially labeled a recession, which is expected to start in 2023, bitcoin will face its first full recession. and it is likely to see a continued decline along with tech stocks.
The positive side?
Despite gloomy macroeconomic forecasts, Some of the top crypto experts see the recent macro-catalyzed cryptocurrency market slump as an overall positive sign for the industry..
Cryptocurrency expert Erik Voorhees, co-founder of Coinapult and CEO and founder of ShapeShift, said that the current cryptocurrency crash is “less of a concern” for him as it is the first cryptocurrency crash resulting from macroeconomic factors outside of cryptocurrencies.
Prior crashes were all bubble blow offs, unrelated to the larger world.
This is the first crypto crash which is clearly exogenous; a result of macro factors outside of crypto.
Maybe this is why, of all the crashes, this one has been least worrisome to me.
— Erik Voorhees (@ErikVoorhees) July 1, 2022
Previous crises were all bubble bursts, unrelated to the world at large.
This is the first cryptocurrency crash that is clearly exogenous, a result of macroeconomic factors unrelated to cryptocurrencies.
Maybe that’s why, of all the falls, this has been the least worrying for me.
Alliance DAO’s main contributor, Qiao Wang made similar comments to his 131,200 followers, pointing out that this is the first cycle in which the main bearish case was an “exogenous factor”:
“People who are worried about crypto because of the macro realize how bullish this is, right?”
“This is the first cycle where the main bearish case is an exogenous factor. In previous cycles, it was endogenous, for example Mt.Gox (2014) and ICOs (2018),” he explained..
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