Markets

How inflation, interest rates and the stock market affect the price of Bitcoin

Published

8 months ago

16 May, 2024

How inflation, interest rates and the stock market affect Bitcoin’s price

While there are cryptocurrency-specific factors that can boost Bitcoin, there is no denying that prices are often influenced by macroeconomic and global events.

Sometimes, Bitcoins the price may suddenly jump or fall without warning.

And in many cases, this is due to macroeconomic and global events outside of BTC’s control – rather than sentiments directly related to the cryptocurrency itself.

Here, we will explore the data and developments that could have an outsized influence on digital asset performance.

Inflation

After the cost of living in the US, UK and other countries reached 40-year highs, inflation has become a closely watched health barometer in major economies.

The tastes of Federal Reserve and the bank of england have a long-established target of 2% for the Consumer Price Index, but that went out the window in the wake of the coronavirus pandemic.

American CPI it reached an impressive 9.1% in June 2022 – and in Britain, double-digit highs of 11.1% were recorded in October of that year. Central bankers in both countries admitted that inflation has proven persistent and difficult to control.

Bitcoiners often like to refer to dollar and pound inflation as an invisible thief because of how it erodes purchasing power — and point to the fact that BTC has a fixed supply of 21 million coins.

For this reason, you might think that worse-than-expected CPI readings would serve as good news for the price of Bitcoin and increase demand for this digital asset.

But often, the opposite has proven to be true.

A classic example of this occurred in May 2024, when the CPI reached 3.4% – less than analysts expected.

In the four hours after the data was released, Bitcoin emerged from $62,650 to $65,000, a considerable increase of 3.8%. Wall Street also rose to all-time highs.

And that brings us to the reason for this little rally.

How inflation, interest rates and the stock market affect the price of Bitcoin – 2

Bitcoin in 24 hours from May 14th to 15th | Source: CoinMarketCap

Interest rate

When Bitcoin was launched in January 2009 – a cryptocurrency that was designed as a protest against the way the 2007/08 global financial crisis was handled – the Fed’s interest rate was 0.25%, low levels that did not had been seen at any time in the last 40 years. years.

They remained in this position for about six years, before starting to rise slightly as confidence in recovery from the recession grew. Then the coronavirus pandemic happened and they were reduced to 0.25% once again.

Critics say this ushered in an era of free money – not least because it reduced the cost of borrowing. Consumers were encouraged to spend, especially considering that returns on savings accounts would have been tepid, to say the least. But as inflation rose at an alarming speed, central banks needed to hit the brakes and quickly raise interest rates to the current level of 5.5%, a high not seen since 2001.

Unfortunately, high interest rates tend to be bad news for Bitcoin. This happens because the appetite for riskier assets decreases, as investors can earn quite healthy returns on their money by depositing it in savings accounts or bonds.

For months and months now, there has been a growing expectation that the Fed will finally act to cut interest rates – and analysts believe this could be a catalyst for Bitcoin. In March 2024, a note from Deutsche Bank strategists said:

“More investors will likely look for higher-yielding alternative assets as Treasury yields decline. This flow of capital into non-traditional investment classes like cryptocurrencies could further support a continued recovery in digital currency prices.”

Marion Labouré and Cassidy Ainsworth-Grace

The stock market

At times, there has been a close correlation between Bitcoin and major indices such as the S&P 500 or the tech-heavy Nasdaq 100.

And you could argue that this will come even closer now that exchange-traded funds based on the spot price of BTC are in operation in US markets – allowing institutional investors to gain exposure to the price fluctuations of the leading cryptocurrency without owning it. directly.

When it comes to global events that can influence the value of Bitcoin, unrest in the Middle East has proven to have a dramatic effect on BTC several times in recent months.

One such decline was observed in mid-April, when it was announced that Iran had launched a drone and missile attack against Israel. Bitcoin fell from $70,000 to $62,000 in a matter of hours as the market digested the news, but quickly recovered.

There was another drop a few days later, when Israel retaliated, amid fears that the ongoing conflict in the region could worsen.

While there are specific factors that could boost Bitcoin – including excitement around halvings, news of nation-state adoption, or acceleration beyond psychologically significant prices – there’s no denying that BTC’s fortunes could also depend on the dollar-based economy. that it was designed to offer. alternative to.

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Markets

Crypto Markets Rebound as Spot Bitcoin ETFs Attract Massive Inflows

Published

6 months ago

17 July, 2024

FinCrypt Staff

Crypto Markets Rebound Ahead of Early Ethereum ETF Approval

This week saw $722 million worth of Bitcoin spot ETF inflows, including the largest daily inflow in a month.

Cryptocurrency markets rallied on Wednesday, driven by inflows into spot Bitcoin exchange-traded funds (ETFs).

The price of Bitcoin (BTC) is up 3% over the past 24 hours to last change hands at $65,200, according to CoinGecko. Ethereum (ETH) is up 2% and is trading at $3,471. Solana (SUN) and Polkadot (POINT) increased by 4%.

Bitcoin spot ETFs saw $422 million in daily inflows on Tuesday, the highest in the past 30 days, according to Far side data, . The all-time record for a single day was $1.05 billion on March 12.

Among Tuesday’s top contributors, BlackRock’s IBIT led with $260 million in inflows, followed by Fidelity’s FBTC with $61 million. This week has already seen more than $722 million in inflows.

Among the top 100 cryptocurrencies by market cap, Worldcoin (WLD) led with a 28% increase, followed by Helium (HNT) with 20% and Lido DAO (LDO) with 15%.

Worldcoin, a decentralized identity project led by OpenAI CEO Sam Altman, announced is extending the lockups for early investors and team members. This means that tokens will be gradually released through 2029, instead of the original 2027 plan. Token unlocks are generally seen as a negative because they increase supply and early investors can sell their tokens for profit.

Meanwhile, XRP, the token of the XRP Ledger network, jumped 8% after the CME and CF benchmarks introduced new indices and reference rates for XRP.

U.S. stocks faced a downturn on Wednesday. The S&P 500 fell 1%, while the Nasdaq Composite and Dow Jones Industrial Average both fell 2%.

Source

Markets

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Published

6 months ago

17 July, 2024

FinCrypt Staff

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Crypto markets appear to have been taken over by the bulls as major tokens have surged above their crucial resistance zone. Bitcoin surged above $65,000 while Ethereum was above $3,500, and XRP, which had remained passive for quite some time, surged over 40% in the past few days to hit $0.6. The uptrend has been captured in most altcoins, with Worldcoin (WLD), Arweave (AR), and Injective (INJ) leading the rally. Here’s what to expect for these tokens in the coming days.

Worldcoin (WLD) Price Analysis

O Worldcoin Price has been trading inside a descending wedge since it marked a new ATH near $12 in the final days of Q1 2024. The recent price action helped the price break out of the upper resistance of the wedge, breaking above the crucial resistance zone between $2.21 and $2.39. Market sentiments have changed, but technicals suggest that the bulls may remain passive for a while, which could offer some room for a bearish pullback.

The price broke out of the wedge with a significant increase in volume, but the current volume suggests that the bulls have taken a step back. Meanwhile, the RSI is about to reach the upper boundary, which could attract bearish forces. Additionally, the DMI has undergone a bullish crossover, but the decline in the ADX suggests that the rally may remain consolidated above the gains. Therefore, the WLD price is expected to maintain a horizontal consolidation between $3 and $3.3 and trigger a fresh rally to $4.4 during the next bullish rally.

Arweave (AR) Price Analysis

Arweave formed a strong base around $25, which helped the rally trigger a recovery during the bearish attack. Mt. Gox and German terror forced the price to fall below $20. However, the recent price action has brought the altcoin within the bullish range and raised expectations of maintaining a decent uptrend for a few more days.

AR price has hit one of the major resistances around $30 to $31.5, which could act as a strong base once overcome. The buying volume is slowly increasing, which could keep the bullish hopes for the rally high. Moreover, the supertrend has just flashed a buy signal, indicating a clean reversal of the trend. Therefore, AR price seems primed to maintain a healthy uptrend and rally above $40. However, if the bulls maintain a similar trend, making new highs above $50 may not be a tedious task for the bulls.

Price Analysis of Injective (INJ)

Injective price has been showing sharp strength since the beginning of the year and hence, the recent turnaround is expected to revive a good uptrend going forward. The bears engulfed the rally to a large extent, but the recent price action suggests that the bulls have regained their dominance. Therefore, INJ price is expected to maintain a strong uptrend with a bearish interference on the way down.

INJ price has surged above the lower support zone and has registered consecutive bullish candles. Although the volume is below the required levels, the OBV is maintaining a sharp uptrend. Furthermore, the Ichimoku cloud lead span B is heading towards the lead span A and a healthy crossover indicates the start of a new uptrend. However, INJ price may be out of the bears’ reach once it secures the resistance zone between $30.77 and $32.12, which seems to be on the horizon.

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Markets

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Published

6 months ago

17 July, 2024

FinCrypt Staff

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Ethereum (ETH) supply on exchanges has hit a 34-month high as the asset’s price surpassed the $3,500 mark.

ETH has risen 2.3% over the past 24 hours and is trading at $3,490 at the time of writing. The second-largest cryptocurrency — with a market cap of $419 billion — briefly touched an intraday high of $3,517 earlier today.

ETH Price, Whale Activity, RSI, and Exchange Supply – July 17 | Source: Santiment

Ethereum’s daily trading volume also increased by 7.6% to reach $19.8 billion.

According to data provided by Santiment, the supply of Ethereum on exchanges has reached $19.52 million ETH. This level was last seen in September 2021, when the asset was trading around the same price.

On the other hand, data from the market intelligence platform shows that the number of whale transactions has fallen by 12% in the last day — falling from 8,730 to 7,629 unique transactions per day.

The move shows that the supply of Ethereum on exchanges has been increasing with small deposits rather than large transactions from whales.

Additionally, the ETH Relative Strength Index (RSI) is currently hovering at the 60-mark, per Santiment. The indicator shows that Ethereum is slightly overbought at this price point, but it may not be in a critical position due to its large market cap.

One of the main drivers of Ethereum price increase is ETH spot expectations ETFs in the US Investment products are scheduled to start trading on July 23rd.

Source

Markets

Bits + Beeps: How to Play the ‘Trump Trade’ in Cryptocurrencies After the Assassination Attempt

Published

6 months ago

17 July, 2024

FinCrypt Staff

Bits + Bips: How to Play the ‘Trump Trade’ in Crypto After the Assassination Attempt

Also, how much will the Fed cut rates (and when)? What will be the inflows into ETH ETFs? And what is the near future for Bitcoin?

Posted on July 17, 2024 at 12:00 PM EST.

Listen to the episode at Apple Podcasts, Spotify, Capsules, Source, Podcast Addict, Pocket molds, Amazon Musicor on your favorite podcast platform.

In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger and Joe McCann, joined by guest Jack Platts, dive into the market reaction to the recent assassination attempt on former President Donald Trump, analyzing how this event will influence the 2024 US presidential election and the cryptocurrency markets.

They also cover potential rate cuts: Could there be a cut in July? How big could the September rate cut be? Could the decision be influenced by the upcoming election?

They also give their predictions on what percentage of BTC ETF inflows the ETH ETFs will reach, and James talks about what he expects for Grayscale’s ETHE (hint: his outlook would be positive for ETH).

Finally, they delve into what’s next for Bitcoin as the German government runs out of BTC and Mt. Gox distributions begin. Just now?

Program Highlights:

Whether Trump’s shooting decided the election and whether the event caused a “flight to safety”
How election markets are becoming a place to watch election probabilities and whether cryptocurrencies “lean right”
Whether rate cuts will occur in July or September and by how much they will cut: 25 bps or 50 bps
How Joe sees the relationship between global liquidity cycles, rate cuts, and the potential rise of Bitcoin
What are the new updates about Ethereum ETFs and their expected launch?
Why Solana Hasn’t Performed Significantly Better Since Trump News
What Market Breadth Indicates About the Current Market Rally and the Impact of Rates on Small Caps
Everyone’s predictions on ETH ETF inflows and how much outflow we’ll see on Grayscale’s ETHE
What’s Next for BTC After German Government Exits Bitcoin and Mt. Gox Giveaways Starting This Week