New outbreak of inflation in the US: Risk to the credibility of the Fed and the impact on cryptocurrencies
🚨 A new outbreak of inflation in the United States could undermine the credibility of the Federal Reserve (Fed), the American central bank, economists warn. This loss of confidence could have significant implications for the cryptocurrency market. 📉
Cryptocurrencies: Refuge or Risk Asset? 🤔
Cryptocurrencies, like Bitcoin, are often seen as a hedge against inflation due to their limited supply. If investors lose faith in the Fed's ability to control prices, they may seek refuge in digital assets, boosting their values. 📈
However, cryptocurrencies are also considered risk assets. If uncontrolled inflation leads to an economic slowdown, investors may shed volatile assets, including cryptocurrencies, in search of safety. 💥 Political uncertainty, especially with the mention of Donald Trump's administration, could further increase market volatility. 🤷♀️
Conclusion
The Fed's credibility crisis could be a double-edged sword for cryptocurrencies: on one hand, it could strengthen their thesis as an anti-inflation asset; on the other, it could trigger a general flight from risk assets. 🎢
