The crypto market has been trading in the green over today’s session as it sees some relief from macro-economic factors. Today, the U.S. published July’s Consumer Price Index (CPI) print which hinted at a slowdown in inflation and allow Bitcoin, Ethereum, and others to experience some relief.
CPI was a crucial metric in the last months, as the U.S. Federal Reserve tried to reduce it by increasing interest rates and decreasing its balance sheet. Global markets have experienced less liquidity, which has adversely impacted risk-on assets such as equities, cryptocurrencies, and other financial instruments.
Bitcoin (BTC) is trading at $23,900 and has a 4% Profit in the Last 24 Hours. Ethereum (ETH) trades as $1,800 and has a 9% Profit over the Same Period. BTC continues to perform better than the second cryptocurrency as more investors are moving into the altcoin market.
July’s CPI print see a decline on the back of commodities trending downwards, particularly the energy sector saw falling prices. However, Rick Rieder, CIO at investment firm BlackRock, believes inflation it’s “still running at a worryingly high rate”.
While this could continue to act as a negative for digital assets, risk-on assets, and long-term investments in the future it might allow the Fed to be more aggressive in their monetary policy. Rieder saidBelow are some thoughts on the possible long-term bullish impact of low inflation.
Over time, we think the slowdown in economic growth, the continuation of the Federal Reserve’s assertive Hiking Cycle and the possibility of resolution with several persistent supply chain issues should influence broad inflation lower.
Rieder believes inflation will continue to trend lower, or moderately in the next few months. This may remove some uncertainty from the crypto markets and allow these assets to receive enough support for reclaiming their highs.
Bitcoin And Crypto: Could Bullish Momentum Continue?
The biggest headwinds for crypto will be the Fed’s Federal Open Market Committee (FOMC), BlackRock’s CIO said. At that time, the financial institution might announce another “substantial” interest rate hike, but there’s “still a lot more data to come between now and the meeting”.
This environment is best served by data provided by Santiment, a crypto research company. recordsA spike in Tether supply (USDT), on exchange platforms. This suggests that market participants are waiting to see more information about macroeconomic factors.
The recent CPI print might provide that clarity, at the time of writing, USDT’s supply on exchanges stands at 42% for the first time since April 2022. That time the market was on track to experience a major bull run that would lead it to new all-time highs.