The Fed is vital to understanding how future asset works. This argument gets maintained by the Bitfinex exchange, which projects the beginning of a recessive period.
The price of bitcoin (BTC) has been falling this year, in line with the stock market, in the face of the discouraging economic panorama; above all, as inflation increases in the United States of America and the measures of the country’s Federal Reserve to prevent t its effects.
For this reason, Bitfinex explained in its latest report on the current macroeconomic context that Fed policy is now a vital factor for asset price performance.
The report highlights that the comments made by the Fed last week are essential to understanding the future performance of the prices of assets like bitcoin. In this sense, two events stand out.
Last Wednesday, the president of this entity, Jerome Powell, reiterated that the job of politicians is to find price stability. Also, the goal should be to fight against the forces of inflation.
Powell also highlighted that he believed the US economy was fundamentally sound and could withstand currency changes. Powell is afraid of not being able to restore price stability in the North American nation. Therefore, the Fed would be carrying out monetary policy accordingly.
Powell also mentioned that Cleveland Fed President Loretta J. Mester declared that she supports an interest rate hike in July. Precisely 75 points if economic conditions remain unchanged.
Bitcoin Price Could Soon Get Harmed by the Fed
Regarding this situation, the price of bitcoin could face troubles due to the new highlights from the United States of America that might become discouraging news for investors. This situation could happen, for example, before the report in July of a possible increase in inflation or interest rates.
The cryptocurrency exchange highlights that the Fed desires to lessen inflation and will resort to “extreme procedures” to achieve its ultimate goal.
The company also highlighted that US unemployment would increase aggressively during the second half of 2022. According to the FED, this situation would become a real problem.
The entity also expressed that the data suggests that a recession is coming, which would continue to harm the market. “This week, the Atlanta Fed registered its second-quarter GDP estimate to -1%, probably putting US GDP in the negative rates for two quarters in a row.
Although the entity highlights that official GDP information will get released on July 28, a negative number would not immediately mean that a recession is waiting at the doors.
By: Jenson Nuñez