The crypto community is looking at three key dates this month that could profoundly affect the trajectory of the cryptocurrency market and the broader macroeconomic environment in the United States this year.
On July 13, the monthly Consumer Price Index (CPI) and inflation-related data will be released to the public. On July 26 and 27, a decision will be made on whether to raise interest rates further, while on July 28, estimates of the United States’ second-quarter 2022 Gross Domestic Product (GDP) will tell us whether the country is in a technical recession.
July 13: Inflation Marker, CPI
Micahel van de Poppe, CEO and founder of crypto consultancy and educational platform EightGlobal, told his 614,300 Twitter followers on July 4 that “all eyes are on next week’s CPI data,” adding bullish forecasts for Bitcoin. should it exceed its $20,000 price point. .
Fuzzy graph but I’d be looking at $28K for #bitcoinif there is a chance that $20K could be flipped (and in the middle I would be monitoring $23K).
All eyes on next week’s CPI data and the FED, but it would make sense. pic.twitter.com/pcWwEmkoHT
— Michael van de Poppe (@CryptoMichNL) July 4, 2022
Co-founder of The Crypto Academy, known on Twitter as ‘Wolves of Crypto’, saying his followers to keep an eye on the date, adding that the lower-than-expected CPI “could be the catalyst for a dead cat bounce” for Bitcoin.
“All eyes on the CPI numbers on July 13. If the CPI goes down, it will be the catalyst for a dead cat rebound.”
The CPI is one of the benchmarks for measuring the progress of inflation by measuring the average change in consumer prices based on a representative basket of household goods and services.
The continued rise in inflation could affect the demand for cryptocurrencies, with consumers having to spend more than before to survive.
Interestingly, while Bitcoin was created amidst high inflation after the 2008 global financial crisis, and was promoted as a hedge against inflation due to its fixed supply and scarcity, in recent years the cryptocurrency has behaved online. with traditional tech stocks, being less than inflation-proof. .
the next scheduled release of the CPI is expected on July 13, 2022 by the US Bureau of Labor Statistics.
According to Trading Economics, the current consensus June inflation rate, or CPI, is 8.7%, up slightly from 8.6% in May.
July 26 and 27: Fed interest rate hike
After raising interest rates by 75 basis points in June, one of the most significant monthly increases in 28 years, interest rates are expected to rise further following the Federal Open Market Committee (FOMC) meeting in late of this month.
Interest rate increases are one of the main tools used by the US Federal Reserve and Central Bank to control inflation by slowing down the economy. Rising interest rates lead to increases in borrowing costs, which can discourage consumer and business spending and borrowing.
It can also put downward pressure on the prices of riskier assets such as cryptocurrencies, as investors can start earning decent returns simply by putting their money into interest-bearing accounts or low-risk assets.
This month, the FOMC is expected to decide whether to impose a 50 or 75 basis point hike. Charlie Bilello, founder and CEO of Compound Capital Advisors, bet on the higher amount.
Fed rate hike expectations in the next 4 FOMC meetings…
-July: rise of 75bp to 2.25%-2.50%
-Sep: 50 bps hike to 2.75%-3.00%
-Nov: rise of 50 bps to 3.25%-3.50%
-Dec: rise of 25 bps to 3.50%-3.75%
—Charlie Billello (@charliebilello) June 28, 2022
July 28: Are we in a recession?
On July 28, the US Bureau of Economic Analysis (BEA) will release an advance estimate of US GDP for the second quarter of 2022.
After recording a -1.6% GDP decline in the first quarter of 2022, the Atlanta Fed’s GDPNow tracker now expects a -2.1% GDP growth decline for the second quarter of 2022.
A second consecutive quarter of falling GDP would put the United States in a “technical recession.”
Related: On the Brink of Recession: Can Bitcoin Survive Its First Global Economic Crisis?
If the US economy is officially labeled a recession, which is expected to start in 2023, Bitcoin will face its first full-blown recession and will likely experience a continued slide alongside tech stocks.
Despite the gloomy macro forecasts, some leading crypto pundits see the recent macro-catalyzed crypto market crash as an overall positive sign for the industry.
Crypto expert Erik Voorhees, co-founder of Coinapult and CEO and founder of ShapeShift, said the current cryptocurrency crash is “less of a concern” for him as it is the first cryptocurrency crash resulting from macro factors outside of the cryptocurrencies.
The previous crashes were all bubble bursts, unrelated to the larger world.
This is the first crypto crash that is clearly exogenous; a result of macro factors outside of crypto.
Perhaps that is why, of all the accidents, this has been the least worrying for me.
—Erik Voorhees (@ErikVoorhees) July 1, 2022
Alliance DAO senior contributor Qiao Wang did something similar comments to his 131,200 followers, noting that this is the first cycle where the main bearish case was an “exogenous factor”.
“People who are worried about cryptocurrencies because of the macro realize how bullish this is, right?”
“This is the first cycle where the main bearish case is an exogenous factor. In previous cycles it was endogenous, for example Mt.Gox (2014) and ICOs (2018)”, he explained.