The crypto community is looking at three macro events to tip the crypto scale in July
The crypto community is looking at three key dates this month that could impact the path to the crypto market and the wider macroeconomic environment in the United States this year.
On 13 July, the monthly consumer price index (CPI) and data related to inflation will be made public. 26.-27. July, a decision will be made on whether to raise interest rates further, while on 28 July, the US Q2 2022 Gross Domestic Product (GDP) estimates will tell us whether the country is in a technical recession.
July 13: Inflation Marker, CPI
Micahel van de Poppe, CEO and founder of cryptocurrency consulting and education platform EightGlobal, told his 614,300 Twitter followers on July 4 that it is “all eyes on CPI data next week”, adding bullish forecasts for Bitcoin if it should turn over the $ 20,000 price point.
Blurry chart but will look at $ 28K for #Bitcoinif there is a chance that $ 20K can be turned around (and in between I will monitor $ 23K).
All eyes on the KPI data next week and the Fed, but would make sense. pic.twitter.com/pcWwEmkoHT
– Michaël van de Poppe (@CryptoMichNL) July 4, 2022
Co-founder of The Crypto Academy, known on Twitter as ‘Wolves of Crypto’, told his followers to keep an eye on the date, adding that the CPI goes lower than expected “could be the catalyst for a dead cat bounce” for Bitcoin.
“All eyes on KPI numbers July 13. If CPI comes lower, it will be the catalyst for a dead cat bounce.”
The CPI is one of the references for measuring how inflation develops by measuring average changes in consumer prices based on a representative basket of household goods and services.
Continued rising inflation may affect the demand for cryptocurrencies, with consumers having to spend more to survive than before.
Interestingly, while Bitcoin was created in the midst of high inflation after the global financial crisis in 2008, and designated as an inflation hedge due to its steady supply and scarcity, in recent years has seen the cryptocurrency perform in line with traditional technology stocks, and be less than inflation-proof . .
The next planned release of the CPI is expected on July 13, 2022 by the US Bureau of Labor Statistics.
According to Trading Economics, the current consensus on the inflation rate in June, or the CPI, is 8.7%, slightly higher than maize 8.6%.
26.-27. July: Fed rate hike
After raising interest rates by 75 basis points in June, one of the most significant monthly increases in 28 years, interest rates are expected to rise further after the meeting of the Federal Open Market Committee (FOMC) later this month.
Interest rate hikes are one of the most important tools used by the Federal Reserve and the US Federal Reserve to control inflation by slowing the economy. Rising interest rates lead to increases in borrowing costs, which can offset consumption and business expenses and lending.
It can also put downward pressure on higher-risk asset prices, such as crypto, as investors can start earning decent returns just by parking their money in interest-bearing accounts or low-risk assets.
This month, the FOMC is expected to decide whether to impose an increase of 50 or 75 basis points. Charlie Bilello, founder and CEO of Compound Capital Advisors, opted for the higher amount.
Fed rate hike expectations at next 4 FOMC meetings …
-July: 75 bps increase to 2.25% -2.50%
-Sep: 50 bps increase to 2.75% -3.00%
-Nov: 50 bps increase to 3.25% -3.50%
-Des: 25 bps increase to 3.50% -3.75%
– Charlie Bilello (@charliebilello) June 28, 2022
July 28: Are we in a recession?
On July 28, the US Bureau of Economic Analysis (BEA) will publish a preliminary estimate of US GDP for the second quarter of 2022.
After recording a GDP decline of -1.6% in the first quarter of 2022, Atlanta Federal Reserve’s GDPNow tracks are now expecting a decline of -2.1% in GDP growth for the 2nd quarter of 2022.
A second consecutive quarter of GDP decline will put the United States into a “technical recession.”
Related: On the brink of recession: Can Bitcoin survive its first global economic crisis?
Should the US economy be officially branded as a recession, which is expected to begin in 2023, Bitcoin will face its first full-blown recession ever and will probably see a continued decline along with technology stocks.
Despite the gloomy macro forecasts, some of Kryptos’ leading experts see the recent macro-catalyzed crypto-market crash as a generally positive sign for the industry.
Crypto expert Erik Voorhees, co-founder of Coinapult and CEO and founder of ShapeShift, said that the current cryptocurrency is “least worrying” for him, as it is the first cryptocurrency to be caused by non-crypto macro factors.
Previous crashes were all bubble blows, with no connection to the larger world.
This is the first cryptocurrency that is clearly exogenous; a result of macro factors outside crypto.
Maybe that’s why, of all the crashes, this one has been the least worrying for me.
– Erik Voorhees (@ErikVoorhees) July 1, 2022
Alliance DAO core contributor Qiao Wang did similar comments to its 131,200 followers, noting that this is the first cycle in which the main bear case was an “exogenous factor.”
“People who are worried about crypto because of macro realize how bullish this is right?”
“This is the first cycle where the main bear case is an exogenous factor. In previous cycles it was endogenous, such as Mt.Gox (2014) and ICOs (2018),” he explained.