Key Facts: Opinions are divided on the trend of financial markets for the remainder of 2024. In the medium and long term, expectations continue to be mostly bullish for bitcoin. Bitcoin (BTC) is trading, at the time of this writing, slightly above the $60,000 per unit. Since the middle of last week, the digital currency created by Satoshi Nakamoto has been hovering around this price level. While it may seem like a “low” figure compared to its all-time high of almost $74,000, it represents a relief for investors who, just 9 days ago, on August 5, saw it close to $49,000 in what was known as “Black Monday.” The following chart, provided by TradingView, allows us to observe these BTC price movements:
Bitcoin price since August 1. Source: TradingView. Today, Wednesday, August 14, 2024, you can expect A day of high volatility for bitcoin. The main reason is that inflation data will be released – more precisely, the consumer price index (CPI) – in the United States, the world's leading financial power. The results of the official inflation metrics could subsequently impact the measures taken by the Federal Reserve (Fed) on interest rates of the dollar.
Cuts in these rates have been promised for the remainder of the year, but so far, they have not materialized. Low interest rates tend to favor volatile financial assets (such as stocks, bitcoin and cryptocurrencies) as investors flock to them in search of better returns than those offered by more conservative instruments such as Treasury bonds. In addition, with low interest rates, it is cheaper to borrow money, which is then used to invest in more “risky” instruments.
Federal Reserve Building (Fed) in Washington DC, United States. Source: stock.adobe.com Bloomberg specialists, a company specializing in financial analysis, have commented:
«Core CPI figures, which exclude volatile food and energy components, are expected to rise 0.2% month-on-month and 3.2% from a year ago. That is close to the Fed's 2% target.» Bloomberg, a financial news agency.
Analyst Brooke May, managing partner at investment firm Evans May Wealth, says the long-awaited rate cut is likely to happen this year. However, she anticipates that if it were too abrupt or too fast, it would be detrimental to volatile markets. May says that “if the Fed cuts rates sharply because the economy is slowing, that is not historically good for equity returns.” In relation to this, she adds: “I would not be surprised to see further falls in stocks in the coming weeks.” There are also others who express great optimism, both for the economy and for the markets, and think that The rebound for stocks (which could be reflected in bitcoin) would not be far away in time. Economist John Higgins, head of Capital Economics, says: “The stock market will recover as the economy holds up better than feared and investors rediscover their enthusiasm for artificial intelligence.” As you can see, opinions are divided. What seems certain, quoting “Hedgedhog,” founder of Fisher8 Capital, is that hours of high volatility are ahead:
“The only thing that is certain is volatility… it is also difficult to choose a direction, but volatility will persist” “Hedgedhog”, founder of Fisher8 Capital
In such contexts, it is essential that investors are clear about their investment time horizon. Bitcoin maintains its fundamentals intact and, in general, There are bullish expectations for the medium and long termGrayscale, for example, goes so far as to say that the price of Bitcoin will reach new all-time highs this year.
Disclaimer: The views and opinions expressed in this article belong to the author and do not necessarily reflect those of BitcoinDynamic. The author's opinion is for informational purposes only and does not constitute investment advice or financial advice under any circumstances.