TeaThe latest financial crisis that shook the crypto sector is a result of macroeconomic factors. However, three events to come may provide clues as to how everything may progress from this point onwards.
As the markets corrected due to events outside the cryptocurrency space, macroeconomic statements would again have a further impact on the space.
Consumer Price Index (CPI) and Inflation
The Consumer Price Index (CPI) and inflation data are due out on July 13. CPI is an indicator of the rate of inflation. The continued increase in CPI could have an impact on cryptocurrency adoption.
Inflation has reached alarming heights, reflecting several major inflations of 1965–1982. For most of that time period, inflation started at 1% and reached 14%, especially in 1980.
When evaluating inflation during that period and inflation today, Glassnode found two similar characteristics. The first is cost-push inflation and the next is demand-pull inflation.
The importance of the CPI’s revelation was highlighted by Michael van de Pope, CEO and creator of AtGlobal.
Furthermore, Pope believes that Bitcoin (BTC) could reach $28,000 if the $20k threshold is breached.
Popeye’s estimates are similar to the findings of experts at Deutsche Bank. In the context of the moderate outlook for bitcoin, research by Deutsche Bank analysts Marion Labour and Galina Pozdnikova offers a fascinating perspective.
According to analysts at Deutsche Bank, the S&P will return to its previous values in January. Additionally, the index’s connection with bitcoin could enable its price to increase by as much as 30% from its current price in mid-2022. BTC is expected to return to the $28,000 area.
Furthermore, the co-founder of The Crypto Academy stated that the decreased CPI would reversal to the price level for bitcoin.
Another interest rate hike by the Fed
Besides CPI, the other major event to watch now is the Fed’s interest rate decision. If the decision is correct, then on 26 and 27 July, a step will be taken to increase the interest rates again.
Raising interest rates is one of the primary tools used by the Federal Reserve and the United States Central Bank to maintain price stability. The cost of borrowing increases when interest rates rise. It curbs finance as well as personal and corporate spending.
Charlie Billello, founder and CEO of Compounding Capital Advisors, thinks interest rates should be in the upper tier of ratings. If this continues, the prices may fall further.
GDP estimates from the US Bureau of Economic Analysis
Finally, the last thing to watch is that on July 28, the US Bureau of Economic Analysis (BEA) is set to announce its estimate of US GDP during the second quarter of 2022.
The Atlanta Federal Reserve’s GDPNow tracking system currently forecasts a -2.1% decline in GDP growth for Q2 2022. GDP declined by 1.6% in the first quarter of 2022. The United States would officially face a crisis if two-quarters of its GDP fell. Also, it could have an impact on the crypto markets.
Pay attention to the events on July 13, 26-27 and July 28. Assuming we go by the view that macro developments have affected the crypto markets, a similar outcome can now be expected.
