The Federal Reserve is at the forefront of attention as inflation persists, potentially delaying expected rate cuts. This decision could significantly impact Bitcoin, teetering between bullish hopes and the risk of a sharp correction.
U.S. inflation data has disappointed expectations, challenging the monetary easing outlook from the Fed. While Bitcoin reached new heights above $124,000, caution is warranted amid an unstable macroeconomic environment.
Source: FedWatch
Despite an unexpected drop in the Consumer Price Index (CPI) in July, accelerating core inflation has seriously shaken confidence in accommodative monetary policy. The Producer Price Index (PPI) jumped dramatically in July, showing a 0.9% increase month-over-month, the highest in three years.
In this climate of uncertainty, all eyes are now turning to the annual economic symposium at Jackson Hole. Fed Chairman Jerome Powell will deliver a pivotal speech next Friday. His statements on the interest rate trajectory will be scrutinized with utmost attention by investors.
Until now, the market had anticipated three rate cuts this year. But this forecast has been reduced to just two cuts in the face of resurgent inflation. If other Fed members also adopt a cautious stance, it could further weaken hopes for monetary stimulus, with implications for Bitcoin’s price.
The cryptocurrency market has experienced an exceptional summer, marked by Bitcoin’s historic records. However, the current economic environment suggests a period of turbulence ahead. Investors will need to remain vigilant and exercise patience in light of Fed decisions, which will have a determining impact on the trajectory of the crypto market in the coming months.
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