After dropping more than 10% to reach $20,700 on Friday, Bitcoin traded sideways for the majority of Monday, following in the footsteps of other crypto assets as investors took a back seat in response to uncertainty regarding the macroeconomy. As of the time this article was written, the price of Bitcoin was trading at $20,271, reflecting a decrease of 1.22% over the course of the previous 24 hours. In comparison, the price of Ethereum represented a decrease of 3.5% over the same time frame, trading at $1,537.
Because inflation is still at a high level, investors are worried that the Federal Reserve will maintain its aggressive monetary policy, which is what sparked the sudden sell-off that occurred in the market the week before last. Onchain measures also showed a jump in exchange BTC inflows, which may indicate that people’s anxieties have returned to the levels they were at in June.
The Federal Reserve Chair, Jeremy Powell, is scheduled to deliver a speech at the annual economic symposium that will be held by the United States Federal Reserve in Jackson Hole, Wyoming, on Friday. This symposium is the most significant event that will take place in the economic world this week. According to The Bank of America (BoFA), the Federal Reserve is likely to keep pushing forward with its strict policy despite the likelihood of a soft landing for markets following Powell’s speech on Friday. BoFA bases this prediction on the fact that the Fed is likely to continue pushing forward with its strict policy.
The bank stated that while Powell “is expected to communicate that the committee continues to feel a restrictive policy stance remains appropriate,” it expects the chair to remark the pace of rate hikes to moderate in relation to the substantial 75bp hikes the Fed has done recently.
As a result of the hawkish FOMC minutes released in July, market participants anticipate the Federal Reserve will raise interest rates by another 75 basis points in September. Despite this, opinions among investors continue to be divided. Some investors believe that the Federal Reserve could change its plan to raise interest rates by 50 basis points in September and November, in addition to an additional 25 basis points in December, given the recent improvements in inflation figures. This misunderstanding has the potential to further roil markets, according to “Venturefounder,” an analyst working for Crypto Quant. We [may] cut around $20,000 over the next 30 days until the FOMC meeting in September because to the fact that inflation is still bad. In the event that the Federal Reserve delivers hawkish signals, the price of bitcoin will plummet and reach a low of $15,000 before beginning a slow recovery over the next three months that would bring it to $29,500 by the end of the year. The founder of the company in question said.
In addition, on Friday, investors will be focusing their attention on the Personal Consumption Expenditure Price Index, also known as the PCE. The fact that the Federal Reserve has officially said that it is their preferred indicator of inflation in the economy is what makes the PCE data point so crucial. In fact, this data point is even more significant than the CPI because of the Fed’s public statement.
According to ‘Tedtalksmacrbluckchaino,’ the Federal Reserve is planning to continue raising interest rates because this indicator has not yet reached its highest point. On the other hand, the analyst pointed out that the general opinion is that PCE reached its highest point in June and that the statistics that will be released on Friday would corroborate this. If what you say is correct, then it is extremely optimistic for risk assets such as Bitcoin and equities.