+8.19%
Tough January inflation data from the U.S. Consumer Price Index (CPI), Producer Price Index (PPI), and hot jobs report leads analyst to voice concerns regarding bitcoin and the cryptocurrency market for the coming year. Strong employment figures indicate increased demand in the economy, potentially leading to increased spending, and high CPI and PPI suggest rising costs of goods and services, contributing to inflationary pressures as Companies can pass these costs on to consumers.
According to Nansen Principles research analyst Aurélie Barthere, “we should now be looking for any signs of weak growth as the next catalyst for cryptocurrency prices.”
Growth slowdown in 2024
“I think the second half of 2024 is more likely to see a slight recession/slower growth, that would be a headwind for Bitcoin,” Barthere told The Block. The Nansen analyst added that there is rigidity on certain components of US inflation, notably services inflation, including housing.
“If inflation were to reaccelerate, this would, in our view, be negative for cryptocurrency prices,” Barthere added.
However, the analyst added that cryptocurrency markets are currently not focused on these macroeconomic tensions. “The cryptocurrency sector is primarily focused on new catalysts such as an ether ETF. However, I think the next phase of the market cycle to watch out for is a slowdown in growth, which would be negative for crypto” , Barthere said.
Analysts predict delay in rate cut
THE CME FedWatch Tool shows that the consensus among analysts is that rates remain paused at current levels, with any possibility of a rate cut postponed until June at the earliest. A slim majority of analysts, 52.5%, expect a quarter-point rate cut in June, but more than 35% expect rates to remain paused throughout this month.
Bitcoin was changing hands for $51,298 as of 9:24 a.m. ET, according to The Block’s price page. The GM 30 Index, representing a selection of the top 30 cryptocurrencies, rose 0.36% to 115.07 over the past 24 hours.
Bitcoin price is now trading above the $51,000 mark. Image: The block.
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