Bitcoin has put on dancing shoes, and you're probably wondering what'll happen to bitcoin after the CPI data and Fed rates are released this month.
Well, we don't have a crystal ball; these events often make or break the market. However, we can make some educated guesses.
Stay tuned till the end for an expert analysis of what these releases mean for the future of bitcoin.
CPI data and FOMC meetings are the linchpins of the US economic indicators. It's a time when the nation's top central bankers put their heads together about interest rates, inflation, and other topics that affect the economy worldwide.
Because when the US sneezes, the world catches a cold!
The Consumer Price Index (CPI) is one of the most closely watched economic indicators, as it can provide insight into inflationary pressures in the economy.
The Federal Open Market Committee (FOMC) sets monetary policy for the US in Fed meetings, and its decisions can significantly impact inflation.
As of July, the United States inflation rate was around 8.5%, the highest since 1981.
Today the Bureau of Labor Statistics released the CPI data, and it is terrifying, 8.3% will let down everyone's expectation. We can say with a heavy heart, inflation is still here to stay.
In the current year, the CPI has been rising steadily, which has led to concerns about inflationary pressures in the economy.
The FOMC has reacted by raising interest rates thrice in 2022, which has somehow helped to keep inflation in check.
However, the skyscraping inflation and interest rates are leading the US in a dire strait.
● High inflation has led to higher interest rates. Fed hiked the interest rate by 0.75 points in July, the highest since 2000.
● Higher interest is causing the value of investments like stocks and bonds to plunge as investors shift their money into less risky assets.
● This leads to slower economic growth, as businesses and consumers alike become less willing to borrow and spend.
● As a result, widespread price increases erode people's purchasing power and put them under financial strain.
Bitcoin has become an increasingly blockbuster investment, as it is seen as a way to hedge against inflation.
However, Bitcoin prices are also highly impacted by these economic facets.
The crypto world was caught up in a blood bath following the fed rate hike of 0.75 points in June this year. Pushing the price of Bitcoin to 20000$, everything was under the blade of butcher.
The market instantly went into a frenzy as prices of major cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and others, started dropping drastically.
But the wind does not always blow from the same quarter!
CPI data in July was a horror. A record 8.5% inflation coerced the Fed to increase the interest rate by 0.75 points once again.
However, the market was ready for a bigger jolt, and in turn, Bitcoin hit the roof with an increase of 15% to $24000.
And now, the fear of a fourth rate hike is hovering over the crypto market.
Shortly after the release of CPI data, Fed is to meet on the 21st of this month to decide the interest rate.
The market is anticipating an increase of 0.75 points due to rudderless inflation.
Bearing this in mind, analysts are testing the tides with these two scenarios for Bitcoin.
● Fed will increase the interest rate by 0.75 points as expected, and the market will show robust growth.
● Fed will bamboozle the market with 1 point hike, and it will dig the Bitcoin into the ground.
Bitcoin was invincible after its previous halving. Skyrocketing all the way up to $70000 in a short spam. With a 2 trillion market cap, everyone was jumping on the bandwagon.
But no one expected the sun to set down long before the night!
In June, Bitcoin slumped to $18000, a 75% drop in under four months. The fall was precipitated by a mass sell-off, as investors cashed out following the cryptocurrency's incredible bull run in late 2021.
While some analysts believe Bitcoin will eventually rebound and reach new highs, others believe the current market conditions indicate a long-term trend reversal.
It was not a crazy sell-off as CPI data was clearly evincing that high inflation would hit the market around every corner.
The Fed raised rates three times in 2022, but some experts say they could have done more. "They really could have just continued raising rates throughout the year and been done with it," observed one analyst.
Still, given the evidence of an improving economy, the Fed's actions were probably warranted.
However, this has also led to a decline in Bitcoin prices, as investors are concerned about the influence of higher interest rates on the economy.
It is worth citing that higher interest rates could lead to a stronger US dollar and sink the demand for Bitcoin. It is still too early to say whether Bitcoin has entered a long winter.
However, the recent price decline could be a harbinger of a longer-term trend. Only time will tell for sure. In the meantime, investors and traders should remain cautious and monitor the situation closely.
The next Bitcoin halving is scheduled to occur in 2024 and is expected to have a major impact on the cryptocurrency market.
While the exact price of Bitcoin at the time of the halving is impossible to predict, many analysts believe that it will cause a considerable increase in demand and cost.
As a result, the 2024 halving is likely to be a highly anticipated event among cryptocurrency investors.
Let's keep the feast to the feast day!
Bitcoin is currently trying to hold its ground at the $23000 level.
With the upcoming Fed meeting, it will be interesting to see which way the wind blows.
Nevertheless, the long-term outlook for Bitcoin remains optimistic, as it is seen as a way to protect against inflationary pressure in the future.
Bitcoin is also seen as a hedge against economic instability. As more and more people adopt Bitcoin as a store of value, the price is likely to continue to the moon.
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