Crypto community eyeing three macro events to tip crypto scales in July

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The crypto community is looking for three key dates this month that could profoundly affect the trajectory of the crypto market this year and the macroeconomic environment of the wider United States.

The monthly consumer price index (CPI) and inflation data will be released to the public on July 13. On July 26-27, a decision will be made on whether to increase interest rates further, while on July 28, the United States Q2 2022 Gross Domestic Product (GDP) estimate will tell us whether the country is in a technical recession.

July 13: Inflation Marker, CPI

Michael van de Pope, CEO and founder of crypto consultancy and educational platform Eight Global, told his 614,300 Twitter followers on July 4 that it is “all eyes on the CPI data next week,” adding to its bullish forecast for bitcoin. Should flip above the $20,000 price point. ,

The co-founder of The Crypto Academy, known on Twitter as the ‘Wolves of Crypto’, Told He asked his followers to keep an eye on the date, adding that the CPI going lower than expected “could be the catalyst for a dead cat boom” for bitcoin.

“All eyes are on the CPI data on July 13. If the CPI comes down, it will be a catalyst for the dead cat boom.”

The CPI is one of the benchmarks to measure how inflation progresses by measuring the average change in consumer prices based on a representative set of household goods and services.

Continuing rising inflation could affect the demand for cryptocurrencies, requiring consumers to spend more than before.

Interestingly, bitcoin was created amid high inflation following the 2008 global financial crisis, and has been touted as an inflation hedge due to its fixed supply and scarcity, with the cryptocurrency in recent years in line with traditional tech stocks. Performing is less than inflation-proof.

The next scheduled release of the CPI is expected by the US Bureau of Labor Statistics on July 13, 2022.

According to Trading Economics, the current consensus on the June inflation rate, or CPI, is 8.7%, up slightly from May’s 8.6%.

July 26-27: Fed hikes interest rates

After raising interest rates by 75 basis points in June, one of the most significant monthly increases in 28 years, interest rates are expected to rise further after the Federal Open Market Committee (FOMC) meeting later this month.

Raising interest rates is one of the primary tools used by the Federal Reserve and the US Central Bank to manage inflation by slowing the economy. An increase in interest rates increases the cost of borrowing, which can discourage consumer and business spending and lending.

It can also put pressure on the prices of high-risk assets, such as crypto, as investors can start earning good returns by simply depositing their money in interest-bearing accounts or low-risk assets.

This month, the FOMC is expected to decide whether to implement the hike of 50 or 75 basis points. Charlie Billello, founder and CEO of Compound Capital Advisors, placed his bet on a higher amount.

July 28: Are we in a recession?

On July 28, the US Bureau of Economic Analysis (BEA) will release advance estimates of United States GDP for the second quarter of 2022.

After registering a -1.6% GDP decline in Q1 2022, the Atlanta Federal Reserve’s GDPNow tracker is now expecting a -2.1% decline in GDP growth for Q2 2022.

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The fall in GDP for the second consecutive quarter would put the United States in a “technological recession.”

related: On the Brink of Recession: Can Bitcoin Survive Its First Global Economic Crisis?

Should the United States economy be officially labeled a recession, which is expected to begin in 2023, bitcoin will face its first full-blown recession and is likely to see continued declines alongside tech stocks.

Silver Lining?

Despite gloomy macro forecasts, some of the leading crypto pundits viewed the recent macro-catalyzed crypto market crash as an overall positive sign for the industry.

Cryptocurrency expert Eric Voorhees, co-founder and CEO of Coinpult and founder of ShapeShift, said that the current crypto crash is the “least worrying” for him, as it is the first crypto crash to result from macro factors outside crypto.

Alliance DAO’s main contributor Qiao Wang created similar notes to his 131,200 followers, noting that this is the first cycle where the main bear case was an “exogenous factor”.

“People who are concerned about crypto because of the macro know how accurate this is?”

“This is the first cycle where the main bear case is an exogenous factor. In previous cycles, it was endogenous, for example, Mt Gox (2014) and ICO (2018),” he explained.