A Good Time to Consider Adding Miners

Apr 5, 2024 • 7 Min Read

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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