Bitcoin Could Face Macroeconomic Headwinds in 2024, Analyst Warns
The recent inflation data from the U.S. Consumer Price Index (CPI), Producer Price Index (PPI), and a strong jobs report are raising concerns about the future of bitcoin and the cryptocurrency market. The robust job figures indicate increased demand in the economy, which could lead to higher spending. Additionally, elevated CPI and PPI suggest rising costs for goods and services, contributing to inflationary pressures as businesses may pass those costs onto consumers.
Nansen Principle Research Analyst Aurelie Barthere believes that any sign of growth weakness could be a catalyst for cryptocurrency prices. Barthere predicts that a shallow recession or growth slowdown in the second half of 2024 could be a headwind for bitcoin. She points out that there is stickiness in some components of U.S. inflation, particularly services inflation like shelter.
If inflation were to re-accelerate, Barthere believes it would have a negative impact on crypto prices. However, she notes that the cryptocurrency sector is currently more focused on new catalysts such as an ether ETF. Nevertheless, Barthere suggests that a slowdown in growth should be closely monitored as it could have a negative effect on the crypto market.
Analysts Forecast Delay in Rate Cuts
In January, prices increased by 3.1% over the past twelve months according to the CPIโs 12-month percentage change data. This is lower than the 6.4% increase observed from January 2022-23. The U.S. Bureau of Labor Statistics reported a 0.6% rise in PPI for final demand services in January, indicating hotter readings.
Due to these readings, analysts are less optimistic about rate cuts in 2024 compared to earlier predictions. The consensus among analysts, according to the CME FedWatch tool, is for rates to remain paused at current levels. The possibility of a rate cut is now expected to be delayed until June at the earliest. While a majority of analysts (52.5%) anticipate a quarter-point rate cut in June, over 35% expect rates to remain unchanged throughout that month.
As of 9:24 a.m. ET, bitcoin was trading at $51,298 according to The Blockโs Price Page. The GM 30 Index, which represents the top 30 cryptocurrencies, increased by 0.36% to 115.07 in the past 24 hours.
๐ฅ Hot Take: Bitcoinโs Future Amidst Macroeconomic Challenges
As an avid crypto enthusiast, you should be aware of the potential macroeconomic headwinds that bitcoin might face in 2024 due to rising inflation and a possible growth slowdown. Here are some key takeaways:
- The recent inflation data from the U.S. CPI and PPI, along with a strong jobs report, are causing concerns about the future of bitcoin and the cryptocurrency market.
- The robust job figures indicate increased demand in the economy, potentially leading to higher spending.
- Elevated CPI and PPI suggest rising costs for goods and services, contributing to inflationary pressures.
- Aurelie Barthere, an analyst at Nansen Principle Research, believes that any sign of growth weakness could negatively impact cryptocurrency prices.
- Barthere predicts a shallow recession or growth slowdown in the second half of 2024, which could act as a headwind for bitcoin.
- She highlights that services inflation, including shelter costs, has shown stickiness in U.S. inflation.
- If inflation were to re-accelerate, it would have a negative effect on crypto prices.
- The cryptocurrency sector is currently focused on new catalysts like an ether ETF, but a slowdown in growth should be monitored as it could be detrimental to the market.
- Analysts are less optimistic about rate cuts in 2024 compared to earlier predictions due to the hotter readings in inflation data.
- The consensus among analysts is for rates to remain paused at current levels, with a possibility of a rate cut delayed until June at the earliest.
- Bitcoin is currently trading at $51,298, and the GM 30 Index has increased by 0.36% in the past 24 hours.
Considering these factors, itโs important to stay updated on the macroeconomic landscape and its potential impact on bitcoin and the wider crypto market. Keep an eye on inflation trends, job figures, and growth indicators to make informed decisions about your crypto investments.
Theon Barrett shines as a distinguished crypto analyst, accomplished researcher, and skilled editor, making significant strides in the field of cryptocurrency. With an astute analytical approach, Theon brings clarity to intricate crypto landscapes, offering insights that resonate with a broad audience. His research prowess goes hand in hand with his editorial finesse, allowing him to distill complex information into accessible formats.