Although the price of bitcoin rose 45% in February, surpassing $60,000 for the first time since November 2021 and ending the month within 9% of its all-time high, macroeconomic factors may act as a barrier to further increases in bitcoin's valuation. cryptocurrencies in the short term. according to gray scale.
Analysts at the high-profile crypto asset manager specifically identified last month's accelerating inflation (and, as a result, the lower likelihood of interest rate cuts by the US Federal Reserve) as the main culprit for the Potentially hampered cryptocurrency price increases in the future.
โAn important lesson from the last crypto cycle is that macro factors, such as the Fed's monetary policy and the state of the economy, can greatly influence the valuations of crypto assets,โ analysts at Grayscale. wroteand notes: "A less favorable macroeconomic outlook could dampen valuations."
"If inflation remains stubbornly high, Federal Reserve officials could consider delaying rate cuts until later in the year or into 2025," they explained, adding: "Broadly speaking, interest rates are likely to rise. "Higher prices in the United States are positive for the value of the dollar and could be negative for Bitcoin."
As CNBC reported, the US national debt is growing by approximately 1 trillion dollars every 100 days, a fact that does not help inflation much.
However, Grayscale doesn't believe the near-term future of bitcoin's valuation is necessarily dire. โIn our view, the most likely outcome is that US consumer price inflation continues to decline, facilitating eventual rate cuts by the Federal Reserve,โ the analysts wrote, โbut crypto investors should monitor upcoming inflation reports (especially the March 12 CPI report and March 14 PPI Report), as well as updated policy rate guidance from the Federal Reserve at its next meeting on March 20."
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