Future Price Of Cryptos: There Is Something Worse Than Inflation

2 years ago · Updated 2 years ago

✍️ 14 October, 2022 - 10:48 👤 Editor: Jakub Motyka

Cryptocurrencies could trade lower amid what analysts describe as stagflation.
Bitcoin (BTC) is currently below $20k, while ETH is around $1,300.

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Cryptocurrencies could record even lower prices amid what analysts termed as a looming stagflation. According to the President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, the ongoing economic situation mirrors such an economic context.

In economics, stagflation is a period of persistently high inflation and unemployment. Kashkari said that the crypto and broader financial markets could be affected. As such, adverse macroeconomic factors have affected digital assets lately. A high inflation rate has caused the Federal Reserve to keep hiking interest rates.

Cryptos Face Hurdles As Investors Opt Out Of Riskier Assets

Amid the jolt in the economy, digital assets are not performing well. At press time, Bitcoin was trading at $19.9k, while Ethereum was at $1,353. Most digital assets have embarked on consolidation with a dismal movement in the last 24 hours.

The price dynamics occur as digital assets show a deeper correlation to stocks and the broader financial market.

A high rate of inflation has caused a dip in the price of digital assets. Analysts explain that the hike of interest rates by the Federal Reserve has pushed the market into a recession. According to the sentiments by Kashkari, the ongoing macroeconomic situation has consequently affected the sector.

Macro Intelligence 2’s founder, Julian Brigden, echoes the sentiments. He said that the current economic condition is nothing short of stagflation. Although Brigden expressed that it could as well be a transition, he said that the rising prices show what seems more of a recessive economy.

Supply Chain Challenges, Manufacturing Bottlenecks, And Soaring Prices

Inflation data reveals high numbers, with the labor market data also showing a rising unemployment rate. According to Kashkari, The Fed cannot settle on an ideal intervention to tame stagflation.

He opined that while high inflation needs monetary tightening policies, slow growth attracts quantitative easing. The current situation has also spiked a supply chain challenge, production backlogs, and unprecedented rise in commodity prices.

The Chief Economist of the world bank group, Indermit Singh, believes that Fed will continue its aggressive borrowing rate hikes. He said that there is a growing concern over generalized stagflation. Singh cited the ever-soaring inflation, reaching as high as double digits in some developed economies.

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Jared Kirui

EN: Jared Kirui is an experienced financial writer with a passion for all things blockchain technology. Previously, he was into stock markets and forex, providing asset managers with top-notch content. With a flair for producing high-quality articles, he started covering crypto news in 2021. He is open-minded, trades for fun, and enjoys sports.

ES: Jared Kirui es un escritor financiero experimentado apasionado por todo lo relacionado con la tecnología blockchain. Anteriormente, estuvo en los mercados bursátiles y forex, brindando a los administradores de activos contenido de primer nivel. Con un don para producir artículos de alta calidad, comenzó a cubrir noticias crypto en 2021. Tiene una mente abierta, comercia por diversión y disfruta de los deportes.