Tomorrow Will Be a Big Day for Cryptocurrencies
Bitcoin is finding buyers at $61,500 at the time of writing this piece, while the current outlook for altcoins is bleak. We also see the weakened risk appetite of investors reflected in volume data. What's concerning is the potential for macroeconomic negativity to suppress cryptocurrencies for more than just a few months. So, why is tomorrow a big day?
A Big Day for Cryptocurrencies
Before the opening of the US stock market, a critical data point that could shake risk markets is expected. Of course, I’m referring to the US inflation data for April. This data came in terribly in the first quarter, and for months, Fed members have advised not to be too pessimistic until more data is available and to evaluate whether the roadmap will be updated accordingly.
On May 14, the US Core Producer Price Index (PPI) came in at 0.5% monthly, higher than the expected 0.2%. The fact that the PPI didn’t cool down raises concerns that we might see a bad surprise in the Consumer Price Index (CPI) data as well. The price lingering at today’s $61,500 clearly reflects this concern.
If tomorrow’s US inflation data comes in above the expected 3.4%, things could get complicated. The expectation for the monthly figure is 0.4%, and the target for core inflation is 3.6% (previous 3.8%). Investors’ focus will be on the actual figures released. We’ll share this data as breaking news. If the data exceeds expectations, we could see sharp declines depending on the magnitude of the surprise. While Powell’s comments today didn’t mention additional interest rate hikes “for now,” he was focusing on the possibility of “delayed interest rate cuts.” If this “tight monetary policy” narrative is articulated more loudly and if the environment that necessitates it continues, we could see bad days for risk markets.
Famous Economist's Crypto Predictions
If we’re talking about macroeconomics, we can also look at the latest comment made by Raoul Pal. Is he highly reliable in the field of macroeconomics, given his extremely bullish stance on crypto? Perhaps not. So, what does Pal say?
According to him, cryptocurrency markets will soon rise. He references the ongoing global liquidity cycle since 2008 as the rationale behind this. If his predictions come true, we will soon see days where assets like Solana and Ethereum outperform Bitcoin, and meme coins reach absurd prices again. However, even as the possibility of the first interest rate cut in September weakens, the likelihood of this prediction coming true remains doubtful for now. But crypto is always full of surprises.
Note: Not Investment Advice
