When inflation recedes, the crypto market should rise! The Federal Reserve's money printing machine is the battle cry for our crypto market!
The freshly released U.S. June PPI data (Producer Price Index) is all below expectations! Monthly rate at 0% (expected increase of 0.1%), annual rate at 2.3% (expected 2.5%), also down from the previous value. What does this indicate? The speed of price increases at factories and raw material sources has hit the brakes! This is the 'upstream' of inflation; with less water from the source, the pressure downstream (CPI consumer prices) naturally eases.
Old Tang's view: This data is like a warm 'little cotton jacket' for the crypto market! Why? The core reason is simple: it makes the Federal Reserve's interest rate cut 'fire' burn even brighter!
Interest rate cut expectations are like a spring tonic for the crypto market! The Federal Reserve's rate hikes have tackled inflation, and now this key PPI indicator has cooled down, indicating that the rate hikes are having an effect. The market is now more willing to bet: a rate cut in September is a sure thing! What does a rate cut mean? Bank interest on savings will decrease, the dollar may depreciate, and 'cheap money' will flood the market! Where will this hot money go? Bitcoin, Ethereum, and other high volatility, high return 'digital assets' serve as natural reservoirs! Think about the wave of cooling CPI at the end of last year when Bitcoin surged 15% in 24 hours! History won't simply repeat itself, but the logic remains unchanged.
The dollar is weak, while the crypto market is strong! When interest rate cut expectations are strong, the dollar tends to become 'soft'. When the dollar depreciates, Bitcoin purchased with dollars becomes 'cheap', attracting global buyers to scoop it up. This is why Bitcoin is often called an alternative asset that 'hedges against dollar depreciation' (though not entirely accurate, but sentiment is there).
Risk appetite is back! With inflation suppressed, the risk of a 'hard landing' (recession) for the economy is reduced. People are no longer anxious and are willing to take money out of 'safe havens' like treasury bonds and gold to gamble on 'getting rich' in the crypto market! When market sentiment heats up, buying pressure surges in.
So, my friends, the 'favorable wind' of PPI cooling has arrived. Are you ready to position yourself in advance and wait for the wind? Remember, the bull market engine is warming up—don't get off before it starts! If you want to delve deep into the crypto market but find it hard to get started, and want to quickly understand the information gap, click on my avatar to follow me for first-hand information and in-depth analysis! #PPI $BTC $ETH
