- Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde maintain a hawkish stance, advocating for continued rate hikes due to strong labor markets and high inflation.
- This macroeconomic landscape raises challenges for Bitcoin, but signs indicate a positive outlook for the cryptocurrency, potentially hitting a $35,000 price point.
As global financial authorities stand their ground, Bitcoin investors are left to wonder how the cryptocurrency will navigate these turbulent economic waters. Jerome Powell, Chair of the US Federal Reserve, has reiterated his hawkish stance, highlighting the need for continued rate hikes. He points to a robust labor market and inflation persistently exceeding the Federal Open Market Committee’s (FOMC) target rate as the impetus for this approach.
This sentiment echoed through the crypto markets after the release of Thursday’s ADP employment report, causing a dip in Bitcoin, Ethereum, and other altcoins’ prices.
Ripple Effect of the Labor Market on Crypto
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Investors are now steeling themselves for the upcoming release of nonfarm payrolls and unemployment rate data, which could signal a tightening US market. Powell’s European counterpart, Christine Lagarde, President of the European Central Bank (ECB), mirrors this hawkish approach. Lagarde emphasizes that the inflation rate, currently sitting at 5.5% for the EU, exceeds the 2% target, thus necessitating further rate hikes into 2024.
She also holds a positive outlook for regional economic growth in the coming years, predicting an upturn around 2024-2025.
These aggressive monetary policies pose challenges for Bitcoin, with increasing treasury yields and returning volatility in the crypto and stock markets. The CME FedWatch tool even points to a roughly 90% chance of a 25-basis point rate hike in the July FOMC meeting. But will these complexities thwart Bitcoin’s potential surge to $35,000?
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In the aftermath of the US jobs data release on Thursday, the crypto market stumbled. Financial juggernaut JPMorgan suggests that even a Securities and Exchange Commission (SEC) approval of a spot Bitcoin ETF might not necessarily stimulate the crypto market. However, BlackRock CEO Larry Fink has a different perspective, asserting that a Bitcoin ETF could democratize crypto and instigate a financial revolution.
With a meeting slated between Bitcoin ETF applicants and the US SEC next week, crucial discussions around approval, necessary rule changes, and other critical factors are on the table. Crypto analysts Michael van de Poppe and Rekt Capital suggest a short-term pullback of Bitcoin dominance, leading to a potential altcoins recovery. Consecutive weeks of crypto asset inflows, coupled with a green-turning monthly MACD, paint a hopeful picture for Bitcoin’s price trajectory.
Currently, Bitcoin trades at $30,142, with Ethereum standing at $1,860, a 4% decrease over the past 24 hours. The rising question now is whether Bitcoin can triumph over economic turbulence and achieve a $35,000 landmark. Only time will tell.
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