- Bitcoin’s price dropped by almost 3% amid U.S economic uncertainties
- Darius Dale believes that inflation worries are impacting asset markets right now
Bitcoin [BTC] is in the headlines once again after its price dropped by almost 3% in a single day, settling at $69,134, at press time. This, in light of the uncertainty associated with the United States’ economic scenario, with the same expected to enter the “no landing” zone sometime soon.
In a recent conversation with Anthony Pompliano, Darius Dale, Founder & CEO of 42Macro, discussed the dire economic situation and its impact on Bitcoin. According to Dale,
“We’re going to continue to see immaculate disinflation over the next couple of quarters, but by the time we get into Q4 we’re very likely to bottom at a level.”
He added,
“With respect to inflation that is inconsistent with the Fed’s 2% target, in our opinion, that’s likely to cause some problems for asset markets.”
Sticky inflation and its impact on Bitcoin
The debate over soft landing, hard landing, and no landing is not new. Talking about the present scenario, Dale highlighted that ‘No Landing’ refers to economic growth at or above the trend, slowing inflation but not reaching the 2% target.
The absence of a clear economic trajectory has escalated downtrends in the crypto-sector, owing to which there are many red candlesticks now on several price charts. Additionally, despite signs of resilience in the U.S economy, investors both in the cryptocurrency market and on Wall Street, are skeptical about the Federal Reserve’s prediction of three rate cuts for 2024.
Echoing similar sentiments, Dale elaborated,
“In our opinion, the markets are moving in the right direction in terms of pricing out rate cuts, pricing volatility into the fixed income markets, but sparing the risk asset markets like equities, credit, and crypto because this is a resilient economy that does not require monetary easy.”
He further noted,
“Crypto-prices going down in my opinion is a flawed assumption that’s inconsistent with market history. There’s plenty of market history of reflation regimes and our clients are currently taking advantage of the current one.”
The way forward
Dale’s opinions highlight that the crypto-market is navigating a new cycle, driven by the introduction of spot Bitcoin ETFs and the upcoming Bitcoin halving.
Despite the SEC’s approval, these ETFs have faced challenges, evident in recent net outflows registering figures of negative $233.8 million. Hence, despite mixed signals on disinflation, investors remain optimistic about the upcoming BTC halving event.
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