Alex Krüger, founder of Aike Capital, a New York-based asset management firm, warns that could drop to as low as $30,000 if US inflation data due on Wednesday (January 12) beats any forecast.

The market expects the consumer price index (CPI) to increase by 7.1% for the full year to December and to increase by 0.4% month-on-month, highlighting why US Federal Reserve officials The United States (Fed) tried to normalize their monetary policy faster than expected.

Expert warns rising inflation could push Bitcoin price down to $30,000

US Inflation | Source: Bureau of Labor Statistics

Further supporting the normalization of the labor market, including rising incomes and a decrease in the unemployment rate, according to data released on January 7.

“Cryptoassets are at the furthest end of the risk curve,” Krüger wrote tweets on 9/1, adding that since they have benefited from the Fed's "extremely loose monetary policy", suffice it to say they would be surprised by tighter policy, moving money into other currencies. Safer property.

" is currently a macro asset that is traded as a proxy for liquidity conditions. As liquidity diminishes, macro investors are now selling and the whole market will follow.”

The first rate hike in March 2022?

The Fed has been buying $80 billion worth of government bonds and $40 billion of mortgage-backed securities every month since March 2020. Meanwhile, the US central bank has kept its benchmark interest rate unchanged. close to 0, facilitating personal and business lending.

Read more  Binance dominates the Indian market as downloads soar
Expert warns rising inflation could push Bitcoin price down to $30,000

Price chart /USD vs Fed balance sheet | Source: TradingView

However, the collateral damage of accommodative monetary policy was higher inflation, which hit 6.8% in November 2021, the highest level in nearly four decades.

So the Fed has shifted its stance from expecting no rate hikes in 2022 to discussing three rate hikes along with balance sheet normalization, despite having previously stated that consumer prices have risen. is "temporary".

Leo Grohowski, chief investment officer at BNY Mellon Wealth Management, told CNBC:

“More tragic than expected and the Fed's change in hawkish tone came as a surprise.

Most market participants expect higher rates, less accommodative monetary policy, but when you look at the funds on offer, the implied 90% is likely to rise in March, into the night New Year's Eve this number is only 63%".

Bitcoin falls into mini bear market?

Mike McGlone, senior commodity strategist at Bloomberg Intelligence, called $40,000 a key support level in the market. Bitcoin. Furthermore, he predicts that Bitcoin will eventually come out of the bear cycle as the world goes digital and takes it as collateral.

Read more  Bitcoin can go to $18,000 if it loses $20,000
Expert warns rising inflation could push Bitcoin price down to $30,000

Price chart /USD daily frame with $40,000 support in history | Source: TradingView

The statement came as Bitcoin fell 40% from its November 10 all-time high (ATH) of $69,000. According to Eric Ervin, managing director at Blockforce Capital, this drop has caused a lot of short-term investors to flee, leaving the market with long-term holders.

It could be the start of a “mini bear market,” Ervin said, adding that such corrections are “completely normal” for experienced crypto investors. .

Krüger also noted that Bitcoin has fallen so far from ATH that it is currently technically oversold. So, if the CPI is unexpectedly in a downtrend, markets can expect Bitcoin price will pop up and trend for a while.

“Wednesday will have US inflation data. Think the price will between $41,000 and $44,000 up to that point,” added Krüger.

Join our channel to get the latest investment signals!