Low Inflation or Breasts: Analysts say Fed has no choice but to continue raising policy rates

Low Inflation or Breasts: Analysts say Fed has no choice but to continue raising policy rates – Mail Bonus

As economic conditions continue to deteriorate, financial analysts around the world are increasingly blaming the US Federal Reserve for blaming the central bank for its early response to rising inflation.

Financial markets are experiencing the worst losses in recent times and there does not seem to be any relief in sight. On May 24, Nasdaq’s technology weight fell by an additional 2%, while Snap, a popular social media company, fell by 43.1% of its market value on May 23.

Much of the recent turmoil has returned to the central bank, which has taken on the task of raising interest rates to try to curb inflation, and financial markets are condemned.

Here’s what some experts say about how this process could proceed and what it means for the price of Bitcoin (BTC) going forward.

Will the central bank tighten its grip until markets break?

Sorry for investors looking for short-term help, economist Alex Krüger thinks that “the Fed will not stop tightening unless markets break (far from it) or inflation falls sharply and for * many * months.”

One of the main problems affecting the psyche of traders is the fact that the central bank has not yet outlined what inflation would have to look like in order for them to get their hands on the interest rate hike. Instead, it simply reiterates its goal of “seeing clear and convincing indications that inflation is falling” towards the 2% target.

According to Krüger, the central bank will “need to see Y / Y [year-over-year] Inflation will fall by an average of 0.25% –0.33% each month until September ”in order to achieve its target of bringing inflation down to 4.3% –3.7% by the end of the year.

If the central bank fails to reach its PCE inflation target by September, Krüger warned of the possibility that the central bank could launch “larger increases * than what is priced *” and also start examining the sale of collateralised securities as part of a quantitative increase in the campaign.

Krüger said:

“Then the markets would start to change into a new balance and fall hard.

Setup for double-digit persistent inflation

The central bank’s responsibility for the current market conditions was also borne by billionaire investor and hedge fund manager Bill Ackman, who suggested “The only way to stop raging inflation today is through aggressive monetary restraint or a collapse of the economy.

In Ackman’s inspectionThe central bank’s slow response to inflation has severely damaged its reputation, while its current policies and guidelines “make up for double-digit persistent inflation that can only be prevented by a market collapse or a massive rise in interest rates.”

Due to these factors, the demand for exposure to equities has been silenced in 2022 – a fact that is evidenced by the recent decline in stock prices, especially in the technology sector. For example, the technical weight of the Nasdaq index has now fallen by 26% from the previous year.

As the cryptocurrency sector is highly technological, it is not surprising that weaknesses in the technology sector have meant weaknesses in the cryptocurrency market, a development that could continue until some kind of resolution leads to high inflation.

Connected: Bitcoin prices return to weekly lows below $ 29K as Nasdaq leads fresh dip in US stocks

How could Bitcoin go into 2023?

According to to Krüger, “the basis of the scenario for the coming price curve is a summer period that begins with an increase followed by a decrease back to lows.

BTC / USDT 1-day chart. Source: Twitter

Kruger said:

“For $ BTC, this increase would take the price to the beginning of the Luna dump (34k to 35.5k).”

Crypto trader and pseudonym Twitter user Rekt Capital offered further insight into prices to keep a good entry point ahead, publishing the following chart showing Bitcoin compared to its 200-day moving average.

BTC / USD 1-week chart. Source: Rekt Capital

Rekt Capital said:

“Historically, #BTC tends to bottom out at or below 200-MA (orange). 200-MA therefore tends to offer opportunities with excessive returns for $ BTC investors (green). […] Should BTC definitely reach 200-MA support … It would be wise to monitor.

The total market value of cryptocurrencies is currently $ 1.258 trillion and the Bitcoin dominance is 44.5%.

The views and opinions expressed herein are those of the authors only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading business involves risk, you should conduct your own research when making a decision.