Although the price of Bitcoin surged 45% in February, surpassed $60,000 for the first time since November 2021, and ended the month 9% off its all-time high, macroeconomic factors could pose a barrier to further growth. further increases in the valuation of cryptocurrencies in the short term. according to Grayscale.
Analysts at the high-profile crypto asset manager specifically identified last month’s accelerating inflation – and the diminishing likelihood of interest rate cuts from the US Federal Reserve, as a result – as the main responsible for potentially blocked crypto price increases in the future.
“An important lesson from the latest crypto cycle is that macroeconomic factors, such as the Fed’s monetary policy and the state of the economy, can strongly influence the valuation of crypto assets,” Grayscale analysts. wrotenoting: “A less favorable macroeconomic outlook could potentially dampen valuations.”
“If inflation remains stubbornly high, Fed officials could consider delaying rate cuts until later this year or until 2025,” they explained, adding: “In general, higher US interest rates are likely to be positive for the value of the dollar and could be negative for Bitcoin.
As CNBC reports, the US national debt is increasing by about $1 trillion every 100 days – a fact that hardly favors inflation.
However, Grayscale does not believe that the near-term future of Bitcoin’s valuation is necessarily dire. “In our view, the most likely outcome is that U.S. consumer price inflation continues to fall, which would facilitate possible rate cuts by the Fed,” the analysts wrote, “but Crypto investors should watch for upcoming inflation reports (especially the March 12 CPI report and March 14 PPI report) as well as updated policy rate guidance from the Federal Reserve at its next meeting on March 20.
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