Fri, August 19, 2022

Crypto Market Overview: July Events that Influence Prices 

Weekly Market Overview: Forex, Stocks, Crypto, Commodities

The crypto community is keeping an eye on three important July events that could significantly impact the direction the crypto market and the broader financial climate in the United States take this year. 

The public will access the Consumer Price Index (CPI) and inflation data on July 13. The decision to raise interest rates further will be taken on July 26–27. Furthermore, on July 28, estimates of the US Q2 2022 Gross Domestic Product (GDP) will reveal if the US is technically in a recession. Let’s discuss each event and its results.

Inflation Marker On July 13

On July 4, Micahel van de Poppe, the CEO and founder of the cryptocurrency consultancy and learning platform EightGlobal, stated to his 614,300 Twitter followers that all eyes would be on the CPI data coming out the following week. He also provided bullish predictions for Bitcoin should it exceed its $20,000 price. 

Twitter user “Wolves of Crypto,” a co-founder of The Crypto Academy, advised his followers to keep a watch out for the date and added that a lower-than-anticipated CPI “may be the impetus for a dead cat bounce” for Bitcoin. 

By evaluating the average change in consumer prices based on a representative basket of household goods and services, the CPI is one of the benchmarks for assessing how inflation develops.

Rising inflation could hurt demand for cryptocurrencies as consumers spend more than before to make ends meet.

Interestingly, while Bitcoin was born in a hyper-inflationary environment following the 2008 global financial crisis and was touted as an inflation hedge due to its fixed supply and scarcity, the cryptocurrency’s performance in recent years is In line with traditional tech stocks and is not strong enough to defend against inflation.

The next scheduled release of CPI is on July 13, 2022, in the United States. Expected Bureau of Labor Statistics.

The current consensus for inflation, or CPI, is 8.7% in June, up slightly from 8.6% in May.

Fed Rate Hike On July 26-27

After a 75 basis point rate hike in June, one of the most significant monthly hikes in 28 years, rates are expected to rise further after the Federal Open Market Committee (FOMC) meeting later this month.

Raising interest rates is one of the Fed and the Fed’s main tools to control inflation by slowing the economy. Rising interest rates increase borrowing costs, discouraging consumers and businesses from spending and borrowing.

It could also put downward pressure on the prices of riskier assets such as cryptocurrencies. Investors can start earning decent returns simply by depositing their funds in interest-bearing accounts or low-risk investments.

This month, the FOMC will decide whether to raise rates by 50 or 75 basis points. Charlie Bilello, founder and CEO of Compound Capital Advisors is betting on a larger amount.

GDP Estimates On July 28

On July 28, the U.S. Bureau of Economic Analysis (BEA) will release a quick estimate of U.S. GDP for the second quarter of 2022.

After recording a GDP contraction of -1.6% in the first quarter of 2022, the Atlanta Fed’s GDPNow tracker now expects GDP growth to contract by -2.1% in the second quarter of 2022.

Despite the bleak macro outlook, some top crypto experts see the recent macro-catalyzed crash in the crypto market as an overall positive sign for the industry.

Bottom Line

The ongoing Bear market has been devastating to investors. While tons of cryptos are losing highs, the abovementioned events might influence the price trends and boost the investors’ hope.

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