Both the leading cryptocurrency and stocks reacted poorly to this view of the potential for inflation to last longer., however, the bond market, which is usually an accurate indicator of the direction of inflation, predicts that it will decline in the coming weeks or months. There is uncertainty in the market.
“The recovery trend looked weak and has for weeks, but I don’t think that alone explains such a big move all of a sudden,” he said. The investment and markets analyst at Hargreaves Lansdown, Susannah Streeter, highlighted that she has to do with the concern about the rise in interest rates in the United States.
According to the cryptonoticias.com site, the analyst indicated that “speculators have withdrawn from high-risk assets in the expectation that higher interest rates will be maintained for much longer.” Precisely, on Thursday the 18th, some US Federal Reserve officials gave divergent signals about the size of the next interest rate hike.
Among them is Neel Kashkari, who said that it was necessary to raise interest rates even if a recession was provoked. Meanwhile, his partner James Bullard has assured that “the idea that inflation has reached its peak is hopeful, but it is not statistically real at this point.”
Streeter said of this: “Hopes that the price of major cryptocurrencies could hold up have been dashed as today’s crypto carnage rounds off an already damaging week.”
He added: “This is not a sudden drop, as assets did not recover immediately, but sank further in the following hours.” That is why different specialists project significant volatility in the price of cryptocurrencies in the coming days.
Even for Ethereum, which came from a strong rise and is now causing concern. Precisely because once the protocol transitions to proof-of-stake, its validators may only allow fully compliant transactions. That is, they do not involve sanctioned addresses or contracts.
Another analyst quoted by the same portal points out that investors may prefer to avoid future volatility by going to US dollars instead of other assets. So too does Streeter, who said we should expect “volatility to continue as the liquidity surrounding financial markets evaporates and as interest rates continue to rise.”
Walid Koudmani, Chief Markets Analyst at XTB, summed up: QOne thing is for sure, crypto investors are increasingly concerned about the sustainability of a relief rally and this most recent pullback could shake their confidence once again despite some signs. Previous Encouraging Q.
Therefore, he also expects notable volatility that could affect bitcoin and ether, as well as other cryptocurrencies. For the foreseeable future, it remains to be seen how they react to the economic outlook to be released by Jerome Powell, the chairman of the US Federal Reserve, and other officials next week.
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Source: Ambito
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