Bitcoin is about to crash?Experts warn that higher inflation may push BTC prices up to $30,000


Bitcoin (BitcoinAlex Kruger, founder of New York asset management company Ike Capital, warned that if the US inflation data released on Wednesday is higher than expected, it may eventually fall to a low of $30,000.

market expect The widely watched Consumer Price Index (CPI) rose 7.1% in the year to December, and 0.4% month-on-month. This surge highlights why Fed officials have been supporting the normalization of monetary policy faster than previously expected.

Overall U.S. inflation.Source: Bureau of Labor Statistics, Bloomberg

According to the data released on January 7, what further supports their preparations is the normalization of the labor market, including increased income and declining applications for unemployment benefits.

“Crypto assets are at the very end of the risk curve,” Tweet Kruger added on Sunday that since they benefited from the “extremely loose monetary policy” of the Fed, it is enough to say that they would be affected by the “unexpected tightening” policy of moving funds to safer asset classes. .

extract:

“Bitcoin is now a macro asset that can be traded as a proxy for liquidity conditions. As liquidity decreases, macro players that are now in competition sell Bitcoin, and all cryptocurrencies follow.”

The first interest rate hike in March 2022?

Federal Reserve Have been buying Since March 2020, there have been US$80 billion worth of government bonds and US$40 billion worth of mortgage-backed securities every month. At the same time, the U.S. central bank kept the benchmark interest rate close to zero, thereby reducing the cost of lending to individuals and businesses.

BTC/USD and the Fed’s balance sheet. Source: TradingView

But the collateral damage of loose monetary policy is higher inflation. Reach 6.8% November 2021 is the highest value in the past four years.

So now the Federal Reserve once claimed that consumer price increases are “temporary“It has changed its position from not expecting a rate hike in 2022 to discuss three rate hikes while the balance sheet is normalized.

Leo Grohowski, chief investment officer of BNY Mellon Wealth Management, said: “This is more compelling than we expected, and the Fed’s shift to a more hawkish stance is unexpected.” Tell CNBC, Added:

“Most market participants expect interest rates to be higher and monetary policy to be less accommodative, but when you see the federal funds suggest that the probability of raising interest rates in March is 90%, only 63% on New Year’s Eve.”

Mini bear market?

Mike McGlone, Senior Commodity Strategist, Bloomberg Information Call 40,000 USD is an important support level for the Bitcoin market. In addition, he expects that as the world becomes digital and treats BTC as collateral, cryptocurrencies will eventually move out of the bearish phase.

The daily price chart of BTC/USD is supported by the history of the $40,000 level. Source: TradingView

The statement was made when Bitcoin began to fall on November 8th A record 69,000 USD It is now over 40%. Blockforce Capital CEO Eric Ervin (Eric Ervin) said that the decline was mainly due to scouring the attention of recent investors, leaving the market with only long-term holders.

This may be a “Mini bear market,” the executive told Bloomberg, adding that such corrections are “completely normal” for cryptocurrency investors.

related: With the full recovery of BTC prices in January 2021, Bitcoin performed a classic rebound with US$40,700

Kruger also pointed out that Bitcoin has fallen too much from its record high, for now Technically oversoldTherefore, if the CPI reading unexpectedly drops, the market can expect that the BTC price will become popular and trending for a period of time.

“U.S. inflation data will be released on Wednesday,” Kruger said, adding:

“I think the price should fluctuate around 41k and 44k before then. Given how strong the rejection of the low point is, the price will tilt upward.”

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