Crypto community watches three macro events to tip crypto scales in July

The crypto community is exploring three key dates this month that could profoundly impact the trajectory of the crypto market and the broader United States macroeconomic environment this year.

On 13 July, monthly Consumer Price Index (CPI) and inflation data will be announced to the public. On July 26-27, a decision will be made on whether to raise interest rates further, while on July 28, the United States 2022 Q2 Gross Domestic Product (GDP) forecasts will tell us whether the country is in a technical recession.

July 13: Inflation indicator, CPI

Micahel van de Poppe, CEO and founder of crypto consulting and education platform EightGlobal, told 614,300 Twitter followers on July 4 that “all eyes are on the CPI data next week” and added bullish predictions if Bitcoin hits above $20,000. .

Co-founder of The Crypto Academy, known as ‘Crypto Wolves’ on Twitter, said He added that the lower-than-expected CPI “could be the catalyst for a dead cat bounce” for Bitcoin.

“All eyes are on the CPI figures for July 13. If the CPI comes in lower, that would be the catalyst for a dead cat bounce.”

The CPI is one of the metrics used to measure how inflation progresses by measuring the average change in consumer prices based on a representative basket of household goods and services.

Rising inflation could affect demand for cryptocurrencies as consumers have to spend more to make a living than before.

Interestingly, although Bitcoin was created amid hyperinflation in the wake of the 2008 Global Financial Crisis and touted as an inflation hedge due to its fixed supply and scarcity, in recent years the cryptocurrency has performed in line with traditional tech stocks and is more inflation-proof. appeared to be less. .

The next scheduled release of the CPI is expected by the US Bureau of Labor Statistics on July 13, 2022.

According to Trading Economics, the current consensus on the June inflation rate, or CPI, is 8.7%, slightly higher than 8.6% in May.

July 26-27: Fed rate hike

Following the 75 basis point rate hike in June, one of the most significant monthly increases in 28 years, interest rates are expected to increase further after the Federal Open Market Committee (FOMC) meeting to be held this month.

Rate hikes are one of the main tools the Federal Reserve and the US Federal Reserve use to manage inflation by slowing the economy. Rising interest rates lead to increases in borrowing costs, which can discourage consumer and business spending and lending.

It can put downward pressure on prices for higher-risk assets like crypto, as investors can start generating reasonable returns simply by parking their money in interest-bearing accounts or low-risk assets.

This month, the FOMC is expected to decide on a 50 or 75 basis point hike. Charlie Bilello, founder and CEO of Compound Capital Advisors, placed his bets higher.

July 28: Are we in recession?

On July 28, the US Bureau of Economic Analysis (BEA) will release its forecast of US GDP for the second quarter of 2022.

The Atlanta Federal Reserve’s GDPNow tracker now expects a -2.1% drop in GDP growth for the second quarter of 2022, after recording a GDP drop of -1.6% in the first quarter of 2022.

Second consecutive quarterly GDP decline could put the US in a “technical recession”.

Related: On the verge of recession: can Bitcoin survive its first global economic crisis?

If the United States economy is officially labeled as a recession expected to begin in 2023, Bitcoin will face a full-blown recession for the first time and is likely to see a sustained decline alongside tech stocks.

Silver plated?

Despite the bleak macro forecasts, some of crypto’s leading experts 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 that the current crypto crash is “least worrying” for him, as it is the first crypto crash caused by macro factors outside of crypto.

Core contributor Qiao Wang of the Alliance DAO did something similar comments He pointed out to his 131,200 followers that this is the first cycle where the main bear case is an “external factor.”

“Do people who worry about crypto because of the macro understand how true this is?”

“This is the first cycle where the main bear case is an exogenous factor. It was internal in previous cycles, such as Mt. Gox (2014) and ICOs (2018),” he explained.