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 risk-on assets that benefit from looser monetar...Unlock this article by joining our Community!
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