Cryptocurrency markets are experiencing a decline amid investor fears of stagflation in the United States, which is considered the most dangerous scenario for high-risk assets. Writes UNN with reference to Coin Desk.
Details
The cryptocurrency market is under pressure due to possible stagflation in the US, as well as a potential increase in liquidity from the Treasury's General Account and the launch of a Bitcoin ETF in Hong Kong. Bitcoin is currently worth around $62,400, down 2.5% over the past 24 hours, while Ethereum has lost 3% and is trading around $3,200.
The market is now facing an important choice of direction, given the strong arguments for both growth and decline. There is a serious risk of stagflation, a state of high inflation and low economic growth.
Last week's US GDP report showed the economy grew by 1.6% in the first quarter of the year, a slowdown from the 3.4% growth in the previous quarter. At the same time, the personal consumption expenditure (PCE) price index, which is a key inflation indicator for the Federal Reserve, showed an increase to 3.4% on an annualized basis in the first three months of the year, up from 1.8% in the fourth quarter of 2023. This combination of slowing growth and high inflation makes it less likely that the Federal Reserve will cut interest rates.
Recall
The price of bitcoin remained stable at around $64,000 due to depressed sentiment in the cryptocurrency market related to expectations of higher interest rates in the US.