A Key Thesis for Bitcoin’s Long-Term Bull Market Just Got a Knock
A popular narrative argues the massive stimulus programs from the Federal Reserve, launched to counter a coronavirus induced recession, could hyperinflate the economy and fuel a major rally in bitcoin.
However, that bullish theory, which suggests the cryptocurrency would be viewed as a hedge asset in dire economic times, has been dealt a blow by recent data from the U.S. central bank.
The data suggests inflation is likely to remain absent for some time and, in fact, the probability of the U.S.
economy slipping into deflation is rising.
There’s now a 78.6% chance of deflationary pressure for the U.S the highest since 2008, according to St.
Louis Fed’s deflation risk monitor.
As tweeted by Ritvik Carvalho, a financial data correspondent at Reuters, the Fed’s favored inflation measure (below right) the core personal consumption expenditure has also declined to an eight year low of 1%.
Inflation refers to a sustained increase in the general price level of goods and services.
Its opposite, deflation is characterized by a general decline in prices for goods and services, and is typically accompanied by a rise in unemployment.
Since the beginning of the coronavirus crisis in early March the Fed has injected an unprecedented amount of liquidity into the system to help the economy absorb shocks arising from the virus outbreak and ensure financial market stability.
Its balance sheet size has expanded by over $3 trillion over the past 3.5 months.
Crypto analysts are convinced that the massive money injections would boost inflation and bode well for bitcoin.
That’s in part based on the cryptocurrency’s reducing pace of supply, which drops by 50% every four years via a process called the “halving.”
“As we’ve closely monitored the market in the wake of recent economic policy decisions, we’ve seen that the crypto asset class is not only resilient, but that interest is surging as the monetary stimulus has caused investors to look to $BTC as a potential hedge against inflation,” Grayscale Investments, one of the leading digital asset management companies, recently tweeted.
(Grayscale is a unit of CoinDesk parent Digital Currency Group.)
Legendary fund manager Paul Tudor Jones also But with the Fed data and market-based measures of long-term inflation expectations also suggesting a low chance of a rise in inflation over the next five years, the odds of bitcoin witnessing an inflation-driven bull market look weak.
ecently disclosed a small bitcoin position to help protect against a rise in inflation.
Read the full topic at
https://www.coindesk.com/bitcoin-long-term-bull-market-inflation-deflation-federal-reserve
Follow me on
Linkedin: https://www.linkedin.com/in/crypto-expert20
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However, that bullish theory, which suggests the cryptocurrency would be viewed as a hedge asset in dire economic times, has been dealt a blow by recent data from the U.S. central bank.
The data suggests inflation is likely to remain absent for some time and, in fact, the probability of the U.S.
economy slipping into deflation is rising.
There’s now a 78.6% chance of deflationary pressure for the U.S the highest since 2008, according to St.
Louis Fed’s deflation risk monitor.
As tweeted by Ritvik Carvalho, a financial data correspondent at Reuters, the Fed’s favored inflation measure (below right) the core personal consumption expenditure has also declined to an eight year low of 1%.
Inflation refers to a sustained increase in the general price level of goods and services.
Its opposite, deflation is characterized by a general decline in prices for goods and services, and is typically accompanied by a rise in unemployment.
Since the beginning of the coronavirus crisis in early March the Fed has injected an unprecedented amount of liquidity into the system to help the economy absorb shocks arising from the virus outbreak and ensure financial market stability.
Its balance sheet size has expanded by over $3 trillion over the past 3.5 months.
Crypto analysts are convinced that the massive money injections would boost inflation and bode well for bitcoin.
That’s in part based on the cryptocurrency’s reducing pace of supply, which drops by 50% every four years via a process called the “halving.”
“As we’ve closely monitored the market in the wake of recent economic policy decisions, we’ve seen that the crypto asset class is not only resilient, but that interest is surging as the monetary stimulus has caused investors to look to $BTC as a potential hedge against inflation,” Grayscale Investments, one of the leading digital asset management companies, recently tweeted.
(Grayscale is a unit of CoinDesk parent Digital Currency Group.)
Legendary fund manager Paul Tudor Jones also But with the Fed data and market-based measures of long-term inflation expectations also suggesting a low chance of a rise in inflation over the next five years, the odds of bitcoin witnessing an inflation-driven bull market look weak.
ecently disclosed a small bitcoin position to help protect against a rise in inflation.
Read the full topic at
https://www.coindesk.com/bitcoin-long-term-bull-market-inflation-deflation-federal-reserve
Follow me on
Twitter: https://twitter.com/cryptoexpert20
If you wont me to post your cryptocurrency article on my blog From the link
https://www.fiverr.com/cryptoexpert20/post-your-cryptocurrency-article-on-my-blog
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