What the Fed, inflation, tapering & rising rates could mean for the price of Bitcoin
After bottoming on bad news a week ago, Bitcoin and crypto had been rallying heading into yesterday’s Fed meeting, but crypto markets fell slightly alongside other major asset classes following the Fed policy statement, and have remained roughly flat this morning.
Source: Fundstrat, Bloomberg
The Federal Reserve spooked some market participants with its commentary around inflation expectations, tapering and rising interest rates.
Source: Fundstrat, CNBC, New York Times
Inflation has been hot on the markets mind as of late. Recent CPI reports came in higher than some expected, and investors have been worried the latest numbers could cause the Fed to tighten policy sooner than anticipated.
Many investors view Bitcoin and crypto as a hedge against inflation. And, although we recognize that some analysts will debate this thesis, we do think there is a relationship here worth watching. Past Bitcoin bull market cycles have tended to occur alongside year over year increases in the Core CPI Index and bear market cycles have come as CPI has rolled over.
Source: Fundstrat, Bloomberg
Does this mean we think Bitcoin is an inflation hedge like gold or a safe haven like treasuries? Not really. We think this is more a result of Bitcoin and crypto being ri...Reports you may have missed
BUYERS ON STRIKE Last week, we discussed our immediate-term cautious approach to the crypto market, highlighting recent geopolitical tensions, tax-related selling, negative fiscal flows, and the persistent rise in real yields as reasons for a more risk-averse positioning (albeit relative, as holding 7.5% in cash and the rest in crypto is hardly considered risk-averse in most circles). This uncertainty has persisted into this week, evidenced by what we consider an...
Fiscal Dominance, Flows from China, Plus Some Thoughts on Global Conflict (Core Strategy Rebalance)
WHAT BTC SHRUGGING OFF CPI SAYS ABOUT CURRENT FISCAL SITUATION The most significant piece of macro data this week was the CPI. Headline CPI registered at 3.5%, surpassing the anticipated 3.4%, while core CPI remained steady from last month at 3.8%, also above the expected 3.7%. This increase was largely attributed to rising costs in auto insurance and shelter. Consequently, interest rates saw a sharp rise, with the 10-year Treasury...
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...
Articles Read 1/1
🎁 Unlock 1 extra article by joining our Community!
You’ve reached your limit of 1 free monthly articles. Please enter your email to unlock 1 more articles.
Already have an account? Sign In c65f24-e56f55-3873f7-d14b4c-48c7c2
Already have an account? Sign In c65f24-e56f55-3873f7-d14b4c-48c7c2
