Markets
Fed Inflation Doubts Leave Crypto Markets Stable
While cryptocurrency prices remained relatively stable after the FOMC minutes, US stocks traded lower due to the low likelihood of hawkish decisions due to inflationary concerns.
Despite positive reports on April’s Consumer Price Index (CPI), Federal Reserve officials remain skeptical that progress in fighting inflation warrants an interest rate cut .
According to the latest Federal Open Market Committee (FOMC) Minutesprice levels have allowed this year’s inflation rates to remain significantly above the Fed’s 2% target.
Although some stakeholders at the policy meeting indicated they were considering rate hikes, officials like Chairman Jerome Powell hinted at tightening economic policies. Federal Reserve Governor Christopher Waller previously said the central bank would need consecutive months of positive inflation data to take a dovish approach and ease interest rates.
Following the FOMC’s decision to maintain a short-term interest rate between 5.25 and 5.5%, US stocks fell slightly. The S&P 500 is trading down about 0.27% according to Google Finance.
However, deVere Group CEO Nigel Green expects the Fed’s outlook to have less impact on investor confidence in the coming months. “We expect the uptrend in markets that has taken major Wall Street indexes to new highs in recent weeks to continue,” Green said in a note obtained by crypto.news, reporting strong earnings season, a recovery in China and Europe, as well as expected rate cuts if the U.S. economy were to achieve a soft landing.
A Flat Crypto Market Does Not Indicate Bitcoin Hedging Status
Bitcoin (BTC) as a hedge against inflation, has long served as a rallying cry for the broader cryptocurrency community. The analyzes also support an argument for so-called digital gold.
Year to date, crypto’s largest token is up about 65%. The asset saw increased demand with the introduction of spot Bitcoin ETFand analysts postulate that the reduce by half triggered a supply shock.
By comparison, the S&P 500 is up 11.9% in a bullish cycle for U.S. stocks. Going back five years, observers will see an even greater growth gap. While Bitcoin is up 781.3% since 2019, the S&P 500 has only managed 87.7% during that time.
Bitcoin may have spent its first 15 years largely outside the U.S. financial market, but the cryptocurrency established its status as an inflation hedge for years with the rebound. So much so that the titans of Wall Street like MicroStrategy And black rock made a foray onto the scene.
BTC Analysis | Source: TradingView
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