Currently, crypto markets have demonstrated resilience in the face of increased volatility and financial stress. Being above the $50,000 level, the OG cryptocurrency has garnered a lot of interest and traction from investors. As data suggests market conditions could deteriorate in the near term, government assets could see decline and weakness. In such a situation, crypto markets are likely to rise and investors will move their money into the world of virtual currencies.
US data suggests warmer-than-expected conditions
The United States PPI inflation Data released by the Bureau of Labor Statistics on Friday showed that wholesale inflation saw a resurgence in January. The Producer Price Index for final demand increased 0.3% in January, seasonally adjusted, compared to the market expectation of 0.1%. Core PPI inflation rose 0.9 percent over the 12 months ended January 2024, showing a slower-than-expected recovery.
On the other hand, the United States Bureau of Labor Statistics announced the consumer price index (CPI) inflation data for January showing that inflation was 3.1%. The figure was lower than that of December. inflation impression of 3.4%, but it was still higher than the general market estimates of 2.9%.
Both of these data points are very important for cryptocurrencies and larger financial markets from a rate decision perspective. The U.S. Federal Reserve typically considers this data to measure inflation, a metric directly correlated with rate decisions.
Fed rate cuts carried over to July
An important tool that investors use to evaluate investments has always been the Federal Reserve's interest rate decisions. The devaluation of government securities caused by lower interest rates often makes assets like cryptocurrencies more attractive. Currently, the two data points have shifted expectations of a rate cut by the US Federal Reserve to July from a previous expectation in June. Market participants are highly anticipating a rate cut coming soon. Easing economic conditions will strengthen investment decisions and also cause investors to opt for riskier assets.
However, currently, with disappointing data, government assets like the Treasury have seen a slowdown. The 10-year U.S. Treasury yield will remain volatile for some time, according to Luis Alvarado, a strategist at Wells Fargo Investment Institute. That along with the link returns The drop has affected sentiment about how the market views the once-haven assets.
Crypto markets heading towards a bull run
Amid falling traction towards government assets, crypto markets are poised for a bull run ahead. Currently, the prospects for many cryptocurrencies, especially bitcoin This year is expected to be positive. Several institutions have been betting that OG cryptocurrency prices will rise in the future. This includes Bitwise's forecast that in 2024, the price of Bitcoin will exceed $80,000. According to Coinbase, at least through the first half of 2024, institutional investment in Bitcoin will remain the main focus.
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