Matrixport Research: The Decline in U.S. Inflation May Drive Up Bitcoin Prices
Macroeconomic data is favorable for the venture capital market, but the cryptocurrency market is underperforming. What will the market trend be?Matrixport Research Institute's latest report highlights the following key market information:
CPI has been below market expectations for two consecutive months, which is favorable for the venture capital market.
The Federal Reserve does not rule out providing stimulus measures by the end of the year, which is beneficial for BTC prices.
The Federal Reserve's hawkish stance is notable, with a possibility of a slight shift towards a dovish attitude by the end of the year.
This week is a macro big week, with U.S. CPI, PPI, and economic data released by the Federal Reserve all relatively favorable for the venture capital market. However, the crypto market has reacted poorly, showing a clear contrast with the U.S. stock market. Lower inflation data and the Federal Reserve's somewhat hawkish stance may create confusing signal effects for BTC.
CPI data has been below the previous month for two consecutive months, favorable for BTC prices
On June 12, the U.S. Consumer Price Index (CPI) data was released. The CPI for May increased by 3.3% year-on-year, slightly down from the previous and expected value of 3.4%; the month-on-month CPI growth for May was 0%, below the expected 0.1%, and also significantly slowed from the previous value, marking the lowest level since July 2022. This is the second consecutive month that CPI has been below the previous month. Since financial markets mainly focus on marginal changes, this inflation data is clearly favorable for Bitcoin, potentially providing sufficient "tailwind" effects for Bitcoin price increases.
The Federal Reserve's hawkish stance is notable, with a possibility of a slight shift towards a dovish attitude by the end of the year
Federal Reserve officials have adopted a slightly hawkish stance and adjusted their interest rate forecasts. The FOMC (Federal Open Market Committee) expects two rate cuts in 2024, rather than the one that the market generally anticipates. This reactive behavior is predictable, and it cannot be ruled out that the Federal Reserve may slightly shift towards a dovish stance by the end of this year, providing more support for the further rise of risk assets.
The possibility of the Federal Reserve providing more stimulus measures by the end of the year cannot be ruled out, which is favorable for BTC prices
The Federal Reserve continues to advocate for a long-term high-interest rate policy, while the 10-year Treasury yield has broken its long-term upward trend, indicating that the market is pricing in a more accommodative monetary policy from the Federal Reserve.
Seasonally, based on historical analysis, June and July are expected to continue providing upward support for Bitcoin. Traditionally, August and September are more challenging, but before the strongest fourth quarter of the year arrives, the market usually experiences positive performance. These buying trends help support the rise in Bitcoin prices, but lower inflation may alter the Federal Reserve's response mechanism. Therefore, it cannot be ruled out that the Federal Reserve will provide more stimulus measures by the end of the year, and Bitcoin is expected to reach new historical highs.
Biden nominates CFTC Commissioner Romero to lead the FDIC, the impact of the U.S. election on crypto assets continues to expand
U.S. President Biden has nominated Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero to lead the Federal Deposit Insurance Corporation (FDIC), and nominated CFTC Commissioner Kristin Johnson to serve as Assistant Secretary for Financial Institutions at the Treasury Department. Both Democratic CFTC commissioners have been urging the agency to issue rules or guidelines to protect consumers and address conflicts of interest in the cryptocurrency space. Commissioner Romero, nominated as FDIC Chair, has warned of "contagion risks" in the crypto market, comparing it to the 2008 financial crisis.
The above viewpoints are partly derived from Matrix on Target, contact us to obtain the complete report of Matrix on Target.
Disclaimer: The market is risky, and investment should be cautious. This article does not constitute investment advice. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided in this content.
