Matrixport Investment Research: Declining U.S. inflation may push up Bitcoin prices

half a month ago
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Macro data is good for the venture capital market, but the crypto market is not doing well. What is the future trend?

According to the latest report from Matrixport Research Institute, the recent market highlights are:

  • CPI has been lower than market expectations for two consecutive months, which is good for the venture capital market

  • The Fed does not rule out providing incentives at the end of the year, which is good for BTC prices

  • The Feds hawkish stance is eye-catching, and there is a possibility of a slight shift to a dovish stance by the end of the year

This week is a big macro week. The US CPI, PPI and economic data released by the Federal Reserve meeting are relatively favorable to the venture capital market . However, the crypto market has not responded well, which is in sharp contrast to the US stock market. The lower inflation data and the slightly hawkish stance of the Federal Reserve may have a confusing signal effect on BTC.

CPI data has been lower than the previous month for two consecutive months, which is good for BTC price

On June 12, the U.S. Consumer Price Index (CPI) data was released. In May, the CPI increased by 3.3% year-on-year, a slight decrease from the previous value and the expected value of 3.4%; in May, the CPI increased by 0% month-on-month, 0.1% lower than expected, and also significantly slower than the previous value, the lowest level since July 2022. For the second consecutive month, the CPI was lower than the previous month. Since the financial market mainly focuses on the marginal rate of change, this inflation data is obviously good for Bitcoin, and it is not ruled out that it may provide sufficient tailwind effect for the rise in Bitcoin prices.

The Feds hawkish stance is eye-catching, and there is a possibility of a slight shift to a dovish stance by the end of the year

Fed officials took a slightly hawkish tone and adjusted their forecasts for interest rates. The FOMC (Federal Open Market Committee) expects two rate cuts in 2024, instead of the one that the market generally expected. This reactive behavior is to be expected, and it is not ruled out that the Fed will turn slightly to a dovish tone at the end of this year, providing more support for further gains in risky assets.

It is possible that the Federal Reserve will provide more stimulus measures by the end of the year, which is good for BTC prices.

The Federal Reserve continues to advocate a long-term high-interest rate policy, and the 10-year Treasury yield has broken its long-term upward trend, indicating that the market is pricing in the Feds looser monetary policy.

From a seasonal perspective, based on historical analysis, June and July are expected to continue to provide upward support for Bitcoin. August and September are traditionally more challenging, but the market usually sees positive performance before the fourth quarter, the strongest quarter of the year. These buying trends help support the rise in Bitcoin prices, but lower inflation may change the Feds response mechanism. Therefore, it is not ruled out that the Fed will provide more stimulus measures at the end of the year, and Bitcoin is expected to hit a record high.

Biden nominates CFTC Commissioner Romero to lead FDIC, and the impact of the US election on crypto assets continues to expand

U.S. President Biden 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 of the Treasury Department for Financial Institutions. The two 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, who was nominated as FDIC chair, has warned of contagion risks in the crypto market and compared it to the 2008 financial crisis.

Some of the above views come from Matrix on Target. Contact us to obtain the full report of Matrix on Target.

Disclaimer: The market is risky and investment should be cautious. This article does not constitute investment advice. Digital asset trading can be extremely risky and unstable. Investment decisions should be made after carefully considering personal circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.

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