Bitcoin and the broader cryptographic market have not been able to find relief despite the favorable data of personal consumption personal consumption (PCE) in the United States. According to Coingcko data, the total capitalization of the cryptocurrency market fell by almost 5% on Friday, May 30.
However, an expert in the industry has explained why the macroeconomic panorama of the United States may not improve for cryptography and other risk assets markets in the coming months. This interesting projection suggests that the future seems a bit uncertain for the price of Bitcoin and the rest of the cryptocurrency market.
Why the Fed Rate cuts will not arrive soon
In a new publication on the social media platform X, Jim Bianco explained why hope The United States Federal Reserve did not reduce the interest rate in the next three meetings of the Federal Open Market Committee (FOMC). According to the investment research expert, the justification behind the reduced probability of a rate cut is the economy of the United States.
Bianco mentioned that it would be reckless for the United States to feed interest rates with the economy by recovering strongly and prices increase. The macroeconomics researcher said decelerated imports, due to the increase in commercial rates, have been positive for the nation’s gross domestic product (GDP).
Bianco explained more:
Imports are “lost GDPs.” It is a product manufactured outside the United States. Therefore, increased imports, which cause a greater commercial deficit, are a ballast in GDP. It was the most important reason why GDP Q1 was negative (revised yesterday from -0.3% to -0.2%). The day of liberation drastically slowed imports, and the commercial deficit was reversed. This is driving GDP Q2. It is now estimated at 3.8%, and could increase, since May was another slow import month.
Source: @biancoresearch
The expert in the financial market also highlighted the resulting inflation driven by the rate that occurs in the US. And how could it boost 2.3% of the highest year -on -year IPC. Ultimately, Bianco believes that the probability of a cutting of the Fed rate is extremely low, since the opposite would be an reckless movement.
How does this impact the Bitcoin market?
In general, lower interest rates mean that the most risky assets, such as cryptography and actions, are more attractive investment options, as the yields of traditional assets decrease (such as treasure bonds). As seen in recent years, the Bitcoin market tends to gather every time the US Fed. Reduce interest rates.
In addition, Fed rates cuts often lead to a weaker US dollar, which could mean a higher value for assets with a price of the United States currency. Therefore, some investors use cryptocurrencies such as bitcoin to protect against the degradation of the fiduciary currency.
Related reading: Fresh capital continues to pour into Bitcoin: Coincidence of market entries 2021
In essence, rates cuts by the United States Federal Reserve are generally optimistic for Bitcoin and Crypto, since they push investors to alternative markets to obtain greater profits. However, it is important to consider the state of the economic environment before the rates cut, since a positive macroeconomic panorama is often more favorable for the most risky assets.
It is also worth mentioning that the absence of rates cuts in the next three months may not necessarily have the opposite bearish effect on the Bitcoin market.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Istock’s prominent image, TrainingView graphics
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