Inflation in the US could affect further growth in the cryptocurrency market.
Investors started buying cryptocurrencies again in the first week of August, returning capitalisation close to the highs of July. Demand for virtual assets is now largely determined by the state of the global economy, fundamental news regarding US inflation.
What will be the trend in the cryptocurrency market next week
The market situation will be determined by US inflation data. If there is a drop in consumer price growth, then the Fed may lower the rate hike.
Recall that a sharp tightening of monetary policy has been one of the main reasons why the cryptocurrency market started to fall this year. High inflation in the US has become a global problem, depriving stocks and cryptocurrencies of liquidity and investment flow.
Because of the Fed's rate hike, there has been a technical recession in the US. The Fed is now forced to reduce the pace of monetary tightening to stimulate GDP. If inflation starts to fall, of course. Inflation is now at 9.1%, a rate not seen in more than 30 years. The experts have predicted an acceleration of inflation but this has far exceeded their expectations.
President Biden's administration needs to bring down inflation because the midterm elections for the Senate are coming up, where his party will surely be defeated. If price rises slow down, then a plunge in the cryptocurrency market is possible. But if inflation rises above 10%, then the opposite effect will occur - Bitcoin and other assets will fall again. It is likely to fall below the psychological mark of $20,000.
Another factor that could have an impact on the cryptocurrency market is the conversion to the PoS algorithm of the latest Ethereum test. Unless, of course, new problems arise. In general, it is strange that such an event could affect the global cryptocurrency market. For many investors, Ethereum acts as a magic symbol that can ensure the market's ascent. Although its digital magic has long been lost.
So, next week, investors' attention will be focused on inflation statistics from the US. If it declines, then the cryptocurrency market can expect growth, although how long and sustainable it will be is hard to say.
You must be logged in to post a comment.