{"id":44623,"date":"2021-06-19T15:34:09","date_gmt":"2021-06-19T12:34:09","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=44623"},"modified":"2025-08-31T17:48:10","modified_gmt":"2025-08-31T14:48:10","slug":"fundamental-analysis-by-currency-com-inflation-pushes-markets-higher","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/fundamental-analysis-by-currency-com-inflation-pushes-markets-higher\/","title":{"rendered":"Fundamental analysis by Currency.com: Inflation pushes markets higher"},"content":{"rendered":"<p>In early June, the cryptocurrency market began to recover after <a href=\"https:\/\/forklog.com\/en\/news\/bitcoin-falls-below-37000-on-news-of-chinas-mining-ban\">May&#8217;s drop<\/a>. But by mid-month Bitcoin and Ethereum had bounced off resistance zones. Along with them, gold prices fell, while equities continued to rise.<\/p>\n<p>The analyst from the Currency.com crypto exchange, Mikhail Karhalev, explained why crypto bears will retreat soon, how the Fed disappointed investors, and where commodity prices are headed.<\/p>\n<h2 class=\\\"wp-block-heading\\\">Cryptocurrencies<\/h2>\n<p>On June 8, sellers attempted to break the Bitcoin support zone around $32,000 on light volumes. By contrast, on May 19 buyers absorbed a much larger amount of market supply and pushed the price back to $42,000.<\/p>\n<p>Weak selling would push the bulls to step up purchases and go on the offensive. Despite the corrections, the $40,000 resistance level is unlikely to hold for more than a few weeks. After it is breached, Bitcoin&#8217;s price could move toward $48,000. If there are no negative news during this period, the price will rise gradually and without corrections.<\/p>\n<p>There are fundamental reasons for the current uptrend:<\/p>\n<ul class=\\\"wp-block-list\\\">\n<li>inflation in the United States <a href=\\\"https:\/\/tradingeconomics.com\/united-states\/inflation-cpi\\\">has reached<\/a> 5%. This is a positive factor for risky assets \u2014 stocks, commodities and cryptocurrencies;<\/li>\n<li>Coinbase <a href=\\\"https:\/\/news.bitcoin.com\/coinbase-interest-pension-funds-hedge-funds-skyrocketed-institutional-holdings-soar-170\/\\\">is preparing<\/a> to offer cryptocurrency instruments to pension funds \u2014 among the largest investors in the market;<\/li>\n<li>22 crypto ETFs are awaiting approval for launch in the United States;<\/li>\n<li>authorities in Iran and India are working on regulation and possible legalisation of cryptocurrencies;<\/li>\n<li>The Bank for International Settlements intends to regulate cryptocurrency regulation.<\/li>\n<\/ul>\n<p>Currently led by <a class=\\\"tracking_link\\\" href=\\\"https:\/\/currency.com\/ru\/eth-to-usd\\\" target=\\\"_blank\\\" rel=\\\"noopener noreferrer\\\">Ethereum<\/a>, the cryptocurrency market is moving downward slowly, but these fundamental factors will continue to push prices higher.<\/p>\n<h2 class=\\\"wp-block-heading\\\">Equity markets<\/h2>\n<p>The Fed kept the policy rate at 0.25% per year and did not change its quantitative easing (QE) policy. Too aggressive action by the regulator would have led to a crash in financial markets.<\/p>\n<p>FOMC officials forecast raising the rate to 0.5%, and then to 1% over three years. But that is unlikely to happen. Such a decision would carry large risks for the market. A similar situation occurred during the 2008 crisis: the Fed held rates steady for several years. Observations of U.S. monetary policy show investors are wrong in about 90% of cases when betting on an aggressive fight against inflation.<\/p>\n<p>Also the price of stocks is influenced by a colossal glut of short money in the market: the Fed&#8217;s balance sheet is growing, while liquid money supplies <span data-descr=\\\"cash and funds held in bank accounts\\\" class=\\\"old_tooltip\\\">M1<\/span> and <span data-descr=\\\"time deposits and other highly liquid investments\\\" class=\\\"old_tooltip\\\">M2<\/span> are at record highs. The volume of <span data-descr=\\\"sale and subsequent repurchase of securities, a mechanism for funding market participants against collateral of stocks\\\" class=\\\"old_tooltip\\\">repo operations<\/span> has reached a historic maximum. These facts indicate that investors have nowhere to put their money.<\/p>\n<figure class=\\\"wp-block-image size-large\\\"><img loading=\\\"lazy\\\" decoding=\\\"async\\\" width=\\\"1024\\\" height=\\\"971\\\" src=\\\"https:\/\/forklog.com\/wp-content\/uploads\/1-480-1024x971.png\\\" alt=\\\"Fundamental analysis by Currency.com: inflation pushes markets higher\\\" class=\\\"wp-image-139530\\\" srcset=\\\"https:\/\/forklog.com\/wp-content\/uploads\/1-480-1024x971.png 1024w, https:\/\/forklog.com\/wp-content\/uploads\/1-480-300x285.png 300w, https:\/\/forklog.com\/wp-content\/uploads\/1-480-768x729.png 768w, https:\/\/forklog.com\/wp-content\/uploads\/1-480.png 1170w\\\" sizes=\\\"auto, (max-width: 1024px) 100vw, 1024px\\\" \/><figcaption>Record-high money supply. <a href=\\\"https:\/\/fred.stlouisfed.org\/series\/WM1\\\">M1<\/a> \u2014 cash and funds held in bank accounts, <a href=\\\"https:\/\/fred.stlouisfed.org\/series\/WM2NS\\\">M2<\/a> \u2014 highly liquid savings.<\/figcaption><\/figure>\n<figure class=\\\"wp-block-image size-large\\\"><img loading=\\\"lazy\\\" decoding=\\\"async\\\" width=\\\"1024\\\" height=\\\"516\\\" src=\\\"https:\/\/forklog.com\/wp-content\/uploads\/2-426-1024x516.png\\\" alt=\\\"Fundamental analysis by Currency.com: inflation pushes markets higher\\\" class=\\\"wp-image-139531\\\" srcset=\\\"https:\/\/forklog.com\/wp-content\/uploads\/2-426-1024x516.png 1024w, https:\/\/forklog.com\/wp-content\/uploads\/2-426-300x151.png 300w, https:\/\/forklog.com\/wp-content\/uploads\/2-426-768x387.png 768w, https:\/\/forklog.com\/wp-content\/uploads\/2-426-1536x774.png 1536w, https:\/\/forklog.com\/wp-content\/uploads\/2-426.png 1600w\\\" sizes=\\\"auto, (max-width: 1024px) 100vw, 1024px\\\" \/><figcaption>Historic high of the <a href=\\\"https:\/\/fred.stlouisfed.org\/series\/RRPONTSYD\\\">repo volume<\/a> \u2014 sale of securities with a mandatory buyback.<\/figcaption><\/figure>\n<p>In these conditions, the inflationary spiral may pick up pace, perhaps after a brief slowdown. Even if U.S. authorities reduce the inflation rate, investors will continue to invest in risk assets such as <a class=\\\"tracking_link\\\" href=\\\"https:\/\/currency.com\/ru\/tokenized-nasdaq-100-index\\\" target=\\\"_blank\\\" rel=\\\"noopener noreferrer\\\">tech stocks<\/a>.<\/p>\n<p>This year, markets do not expect ten-year Treasury yields to rise by more than 2.3%. That figure is below or in line with the Fed&#8217;s inflation target. Bond yields do not offset the decline in the dollar. Investors remain to seek returns in risk assets.<\/p>\n<h2 class=\\\"wp-block-heading\\\">Commodities<\/h2>\n<p>Commodity markets were hit hardest by inflation and have entered a correction. The outlook for commodities depends on whether the Fed can convince investors of the mantra &#8216;inflation is temporary.&#8217; If Fed members fail, commodity prices will continue to rise modestly.<\/p>\n<p>Inflation is a secondary factor. For commodity prices, demand from producers is more influential. <a class=\\\"tracking_link\\\" href=\\\"https:\/\/currency.com\/ru\/tokenized-brent-crude-oil-price\\\" target=\\\"_blank\\\" rel=\\\"noopener noreferrer\\\">Oil<\/a>, platinum, palladium, copper, steel and other commodities will continue to rise thanks to the rebound in production. <a class=\\\"tracking_link\\\" href=\\\"https:\/\/currency.com\/ru\/tokenized-gold-price\\\" target=\\\"_blank\\\" rel=\\\"noopener noreferrer\\\">Gold<\/a> and silver have already begun to recover after a correction.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Currency.com analyst Mikhail Karhalev explains why crypto bears will retreat soon, how the Fed disappointed investors, and where commodity prices are headed.<\/p>\n","protected":false},"author":1,"featured_media":44624,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"2","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[1144],"tags":[1933,1145],"class_list":["post-44623","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-longreads","tag-currency-com","tag-market-analysis"],"aioseo_notices":[],"amp_enabled":true,"views":"21","promo_type":"2","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/44623","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=44623"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/44623\/revisions"}],"predecessor-version":[{"id":44625,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/44623\/revisions\/44625"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/44624"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=44623"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=44623"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=44623"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}