A Good Time to Consider Adding Miners
Inflows Resume
On Monday, market sentiments were rattled by a surprisingly strong manufacturing PMI figure, marking the first expansionary reading in 18 months. This led to a rise in rates, with risk assets across the board experiencing selloffs amid renewed inflation concerns and fears that the Federal Reserve might need to implement further measures to cool the economy.
However, in our crypto comments video on Tuesday, we outlined a couple of reasons why we were not overly concerned about the implications of a robust PMI figure.
First, an expanding economy is generally beneficial for Bitcoin. Throughout its relatively short history, Bitcoin has demonstrated a strong positive correlation with manufacturing PMIs. As the economy expands and business confidence grows, there is an increase in investment in the real economy. This confidence eventually translates into financial assets, with investors becoming more inclined to engage in speculation.
Therefore, an expansionary PMI figure is, on the whole, a positive indicator for crypto prices. It's worth noting that a scenario featuring both a contractionary PMI and rising inflation (stagflation) is, in our analysis, the only economic regime that poses a sustained threat to crypto prices.
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RATE EXPECTATIONS MOVING LOWER Last week, we discussed how rate expectations were a barrier to crypto moving higher and that we anticipate continued non-recessionary but soft economic data will help spur flows. Fast forward to this week, and we have seen a cool manufacturing PMI, a soft JOLTS report, and a services PMI in which the price component was below market expectations. The remaining important data for this week includes...
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