Bitcoin, by far the most popular cryptocurrency, is currently trading between $19,000 and $20,000. Bitcoin’s price is being set by the global economic market. Slow Bitcoin price movement can be attributed to the bearish mood on the market.
Recent Released: US Jobless Claims Out, Crypto Rally Expected
The Federal Reserve remains aggressive in its efforts to reduce inflation. On the other hand, threats to international financial stability are testing the Fed’s resolve. Former Treasury Secretary Lawrence Summers is now calling for the Fed to maintain its current aggressive monetary policy.
Bitcoin has lost 2.42% of its value in the past day, trading at $19,490.
There Are Risks Bitcoin’s Value Could Fall
The price of bitcoin closely follows that of the whole market. Increases in S&P 500 and NASDAQ-100 volatility are correlated with Fed policy tightening. As a result, Bitcoin, which is double tied to the market, is seeing a severe drop in value.
The Fed’s support among the market is quickly eroding. According to many major Wall Street banks, inflation has already reached its pinnacle in the United States. This means that the central bank’s vigorous tightening is not required. The Federal Reserve is also being held responsible by some experts for the possible economic downturn.
The United Nations has urged governments around the globe to persuade their own central banks to ease up on the tightening of their monetary policies. Like the IMF, the World Bank predicts a severe downturn in economic activity around the world in 2023.
In spite of this, it appears that senior Fed officials will not be swayed from their hawkish attitude. Minnesota Federal Reserve President Neel Kashkari has said he has seen no signs that inflation is about to peak. The Fed’s position will be strengthened by the latest unemployment figures released by the US Department of Labor. Because of this, Bitcoin’s value will decrease even further.
A former Treasury secretary is now providing the Fed with some much-needed backing. He thinks inflation can be kept at bay if the Federal Reserve keeps its word.
When it comes to a downturn, what are Summer’s plans?
Summers, like the Fed, believes that inflation should be given greater importance than financial stability. He believes the Fed can address the recession after inflation is under control.
However, the Fed has not yet disclosed its strategy for combating stagflation.
Source: Google Trend