Macroeconomic factors may pose significant obstacles to the short-term growth of the leading cryptocurrency’s value, according to Grayscale analysts.
Read the full analysis from @LowBeta_ and the Grayscale team: https://t.co/AkdcO4AxjX pic.twitter.com/CUrDvuwwwh
— Grayscale (@Grayscale) March 1, 2024
“If inflation remains persistently high, officials at the Fed may delay reducing the key rate until later this year or into 2025. A higher rate is likely to positively impact the US dollar and negatively affect bitcoin,” the report states.
Experts noted that the impact of macroeconomic factors, such as the Fed’s monetary policy and the state of the economy, on the digital asset market is an important lesson from the previous crypto cycle.
Grayscale believes that bitcoin’s growth reflects a significant influx of funds into spot ETFs based on the leading cryptocurrency and expectations of the upcoming halving.
“It is most likely that US inflation will continue to decline, increasing the likelihood of a Fed rate cut. However, crypto investors should monitor upcoming inflation reports on March 12 and 14, as well as updated guidance on the Fed’s course at the next meeting on March 20,” the report states.
In January, the US inflation index stood at 3.1%. The figure exceeded the forecast of 2.9% but was better than the previous month’s 3.4%. This result led to the postponement of rate cut expectations from May to June, but had limited impact on bitcoin.
Earlier, Galaxy Digital CEO Mike Novogratz suggested a correction of the leading cryptocurrency before reaching a new all-time high. He also noted the high level of leverage in the industry.
Popular blogger and analyst PlanB has announced the start of a bull market.