Main takeout:
The Cryptocurrency market responded positively to Wednesday’s CPI (Consumer FRIRICTE Index) report and reduced the prospect of an increase in trade war between the United States and China. The demand for alternative hedge tools is generally weakened in these scenarios, but BTC (Bitcoin) is nearly $ 109,000, and Ether (ETH) recorded 3% profit, trading more than $ 2,800.
It’s too early to call it a trend, but the encryption market is slightly different from traditional assets. The S & P 500 index returned some of the initial profits for the first time by the US President Donald Trump’s new trade agreement with China.
According to the agreement, the two countries will return tariffs to the level of February 2025, relieving tension and removing retaliation taxes. However, the performance of the stock market suggests that investors were overwhelmed even if the risk of economic falls was greatly reduced.
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The 2.4%annual inflation rate reported by the US Consumer Price Index provided some slogans, especially in the context of the price increase leaded by the World Trade War. In general, this development will increase trust in stocks and strengthen US dollars, but investors are still unstable about increasing US government debt.
The US dollar index (DXY) fell to the lowest point in seven weeks, indicating that investors are retreating from the dollar. This decrease in general, we point out that the trust in the ability to manage the economic risk of the Federal Reserve Bank is reduced and raising concerns about the state’s financial trajectory. As a result, market participants are assigned to other major Fiat currencies.
On Tuesday, JPMORGAN CHASE CEO Jamie Dimon emphasizes the risk of Private Credit, a problem during economic downturn. According to CNBC, Dimon thinks the United States is vulnerable to the recession. In particular, employment will be “slightly falling,” and the rise in inflation pressure continues.
Joe Brusuelas, the chief economist of RSM, told Yahoo financing, “We have not actually passed from tariffs.” In short, the lack of powerful economic growth remains a major concern for investors. The more the US Federal Reserve Bank maintains the current interest rate, the more likely it will be a recession.
According to the CME Fedwatch tool, the probability of futures for the year -end funding target rate has changed especially last month. The market is a 73% chance that it will be more than 3.75% by December with a 42.5% chance of a month ago.
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More interest rates have a double negative impact on the economy by raising debt issuance and lying nancing, regardless of individuals, companies or governments. In addition, interest rates that exceed the expected inflation tend to put weight on risky assets because the fixed import yield is more attractive.
The initial signs of separate from the stock market suggest that investors are pursuing higher profits, significantly that the US government is ready to raise the debt upper limit. As a result, regardless of the prospect of economic growth, cryptocurrency seems to be benefited from this environment, with the expectation of the central bank’s liquidity.
This article is for general information purposes and should not be considered legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.