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The latest financial crisis that shook the crypto sector is the result of macroeconomic factors. Three forthcoming incidents, though, may give clues around how everything could perhaps progress from this point.
As the market correction was all because of the incidents that happened outside the crypto space, the macroeconomic statements will have further influence on the space again.
Consumer Price Index (CPI) & Inflation
On July 13th, the Consumer Price Index (CPI) and inflation figures are set to be revealed. The CPI is an indicator of the rate of inflation. A continuing rise in CPI might have an effect on crypto adoption.
Inflation has reached alarming heights, mirroring several of the Big Inflation of 1965-1982. For most of that time period, inflation began at 1% and reached 14%, especially in 1980.
When evaluating inflation during that period and today’s inflation, Glassnode found two similar characteristics. First, is cost-push inflation and next is demand-pull inflation.
The significance of the CPI revelation was highlighted by Michael van de Poppe, CEO, and creator of EightGlobal.
Blurry chart, but would be looking at $28K for #Bitcoin, if there's a chance that $20K can be flipped (and in between I'd be monitoring $23K).
— Michaël van de Poppe (@CryptoMichNL) July 4, 2022
All eyes on the CPI data next week and the FED, but would make sense. pic.twitter.com/pcWwEmkoHT
Furthermore, Poppe feels that if the $20k threshold is crossed, Bitcoin (BTC) might reach $28,000.
Poppe’s estimations are similar to the conclusions of Deutsche Bank experts. In terms of the moderate outlook for Bitcoin, research from Deutsche Bank analysts Marion Laboure and Galina Pozdnyakova provides a fascinating perspective.
As per Deutsche Bank analysts, the S&P will recover to its previous values in January. Additionally, the index’s connection to bitcoin may enable its price to jump by 30% from the current price during the mid of 2022. BTC is then expected to return to the $28,000 area.
Furthermore, The Crypto Academy’s co-founder stated that a decreased CPI will see rebounding price levels for Bitcoin.
All eyes on CPI numbers on July 13th.
— Wolves Of Crypto 🐺 (@WolvesofCrypto_) July 4, 2022
If CPI comes in lower that will be the catalyst for a dead cat bounce.
If the bounce exceeds 28.6k that's when we would have to start to seriously consider the possibility of a macro trend reversal.#crypto #cryptocurrency #bitcoin
FED’s Another Interest Rate Hikes
Besides CPI, the second major event to watch for now is the FED’s interest rate decision. If the decision is true, then the move to raise interest rates again will be made on the 26th and 27th of July.
The increase in interest rates is among the primary tools used by the Federal Reserve and the United States Central Bank to maintain price stability. Borrowing costs grow when interest rates increase. This prevents finance as well as individual and corporate spending.
Charlie Bilello, the founder, and CEO of Compounding Capital Advisors feels that interest rates should be on the upper side of the rating. If this is the case, prices may fall even more.
Fed rate hike expectations at next 4 FOMC meetings…
— Charlie Bilello (@charliebilello) June 28, 2022
-July: 75 bps hike to 2.25%-2.50%
-Sep: 50 bps hike to 2.75%-3.00%
-Nov: 50 bps hike to 3.25%-3.50%
-Dec: 25 bps hike to 3.50%-3.75%
US Bureau Of Economic Analysis’s GDP Estimation
Finally, the last thing to watch out for is, that on July 28th, the US Bureau of Economic Analysis (BEA) is set to announce its estimate of US GDP during Q2 of 2022.
The Atlanta Federal Reserve’s GDPNow tracking system presently anticipates a -2.1% drop in GDP increase for Q2 2022. GDP fell by 1.6% in the first quarter of 2022. The United States would officially suffer a crisis if two-quarters of its GDP fell. Also, this might have an influence on the crypto markets.
Take note of events occurring on July 13th, 26th-27th, and 28th. Suppose we go by the idea that macro developments have influenced the crypto markets, a similar outcome can be expected even now.