Bitcoin and a wider cryptographic market found no relief despite favorable basic data on personal consumption expenditure (PCE) in the United States. According to Coingeck, the total capitalization of the cryptocurrency market fell by almost 5% on Friday, May 30.
However, an industry expert explained why the American macroeconomic landscape may not be better for cryptocurrencies and other risk assets in the next few months. This engaging projection suggests that the future seems a bit uncertain of the price of bitcoins and the rest of the cryptocurrency market.
Why the cutting of the Fed rates will not appear soon
In the novel post on the social media platform x Jim Bianco explained why he Expecting The United States Federal Reserve did not reduce the interest rate during the next three meetings of the Federal Open Market Committee (FOMC). According to the expert on investment research, the reflecting US economy is justifying the reduced probability of lowering the feet.
Bianco mentioned that the Fed Fed would be a reckless reduction in interest rates, and the economy is strongly recovering and prices are rising. The macroeconomics researcher said that the slowed import – due to the increased trade tariffs – was positive for the domestic domestic product (GDP).
Bianco further explained:
Imports are “lost GDP”. It is a product produced outside the United States. Therefore, favorable imports, which causes a larger commercial deficit, are GDP providing. This was the biggest reason why the Q1 GDP was negative (changed yesterday from -0.3% to -0.2%). The liberation day has dramatically slowed down, and the trade deficit turned away. This increases the Q2 GDP. It is estimated that it is currently 3.8%and may raise, because maybe there was another leisurely month of import.
Source: @biancoresearch
The expert on the financial market also emphasized the resulting tariff -based inflation, which is taking place in the USA and how it can raise 2.3% CPI every year. Ultimately, Bianco believes that the likelihood of cutting the speed of the feder is extremely low, because the opposite would be a reckless movement.
How does this affect the Bitcoin market?
Usually, lower interest rates mean that more risky assets, such as cryptographic and shares, are more attractive investment options, because the yields regarding established assets (such as tax bonds) are decreased. As you can see in recent years, the Bitcoin market is accumulating when the American Fed lowers interest rates.
In addition, Fed’s cuttings often lead to a weaker American dollar, which can mean a higher value for assets valued in relation to the United States currency. Therefore, some investors exploit cryptocurrencies such as Bitcoin to protect against FIAT currency housing.
Related Reading: Fresh Capital is still coming to Bitcoins – matching the inflow on the bull market 2021
Basically, rates of rates by the US Federal Reserve are generally stubborn for bitcoins and cryptocurrencies, because they push investors to alternative markets in order to obtain higher profits. It is crucial, however, to consider the state of the economic environment before lowering the feet, because the positive macroeconomic landscape is often more beneficial for more risky assets.
It is also worth mentioning that the lack of stakes in the next three months may not necessarily have an opposite impact on the Bitcoin market.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Recommended photo from Istock, chart from TradingView
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