US Economic Slowdown Seen as Boon for Cryptocurrencies, Says Expert

The easing of inflation concerns in the United States and hopes for a rate cut by the Fed are positive factors for cryptocurrencies. This conclusion was shared by BRN’s leading analyst Valentin Fournier in a comment for The Block.

“As inflation approaches the Fed’s target of 2%, expectations for multiple rate cuts are strengthening. This could lead to a new wave of liquidity injections, benefiting alternative risky assets like cryptocurrencies more than stocks, which may struggle in a slowing economy,” the specialist noted.

In his view, Wall Street has reacted to this prospect. On April 30, the day the PCE report was released, there was a $56 million outflow from Bitcoin ETFs. Net inflows for May 1 amounted to $442.5 million.

The previous driver of growth in ETF inflows was the rotation of capital from traditional assets. Now, it is the bullish price movement, Fournier believes:

“Nevertheless, net inflows into ETFs have generally slowed over the past week, indicating a possible end to the distribution phase, with current inflows now driven by price dynamics.”

Earlier, analyst and MN Trading founder Michaël van de Poppe highlighted the “growing potential” for the cryptocurrency market to rise amid falling rates and a weak US dollar.