As a seasoned researcher and investor with over two decades of experience in the financial markets, I find myself intrigued by the current state of affairs in the crypto space. The recent drop in US PCE inflation and the subsequent dovish tone from global central banks, particularly the Federal Reserve, have historically been a catalyst for increased risk-taking and asset appreciation, including cryptocurrencies like Bitcoin, Ethereum, and Shiba Inu.
On September 27th, there was an additional motivator for cryptocurrencies, stocks, and other high-risk investments, as the US government released optimistic inflation figures.
US PCE inflation dropped in August
Bitcoin (BTC) maintained its position above $65,000, while digital currencies such as Wormhole (W), Floki (FLOKI), Pepe (PEPE), and Shiba Inu (SHIB) saw a surge of more than 15%. Meanwhile, futures linked to the Dow Jones, S&P 500, and Nasdaq 100 experienced an increase of approximately 25 basis points.
According to data from the statistics agency, personal spending decreased from a 0.2% increase in July to just a 0.1% rise in August, which was lower than the predicted 0.2% growth. Compared to the same time last year, it dropped from 2.5% to 2.2%, marking its lowest point in more than two years.
The rate at which the primary measure of personal consumption expenditure, after removing unstable food and energy costs, decreased slightly from 0.2% to 0.1% over the course of the month.
Based on these figures, it appears that the Federal Reserve is approaching its desired inflation level of 2.0%. Consequently, there’s a strong possibility that the bank will persist with reducing interest rates during their final two sessions this year, given that the unemployment rate remains higher than 4%. The Fed has already reduced rates by 0.50% in their most recent gathering.
Various central banks worldwide, such as the Swiss National Bank, the European Central Bank, and the Bank of England, have similarly expressed a more lenient approach in their recent statements.
Historically, digital currencies such as Bitcoin, Ethereum, and Shiba Inu have tended to thrive when the Federal Reserve reduces interest rates.
Additionally, as the world’s second-largest economy, China has made significant monetary movements. On Tuesday, their central bank lowered a significant interest rate and reserve ratios, a decision that will release approximately $100 billion to maintain market stability within their stock market. Moreover, Beijing is contemplating providing an extra $150 billion in financial stimulus.
Czech Republic is being freed from prison
— Crypto Tea (@CryptoTea_) September 27, 2024
Changpeng Zhao release
As a researcher, I found myself observing an intriguing phenomenon in the cryptocurrency market: Bitcoin, Wormhole, and Pepe all surged in value, seemingly fueled by anticipation surrounding the potential release of Changpeng Zhao from custody. The crypto community appeared to be holding their breath, eagerly waiting for any updates on the situation involving one of the industry’s most influential figures.
Binance‘s founder, Zhao, was completing a four-month term in prison as part of his agreement with the U.S. authorities.
Beyond his statement, Zhao faced a fine of $50 million and stepped down from his position as CEO at Binance. The court also mandated that Binance pay a penalty of approximately $4.3 billion.
As a crypto investor, I’m eagerly anticipating the impact of CZ’s upcoming release on the market. According to Ki Young Ju, CEO of CryptoQuant, we could witness unprecedented growth in the crypto sphere, with values potentially soaring skyward upon his release. Similarly, Adrian Zdunczyk, a respected analyst with over 600k followers, predicts that traders will initiate a surge of activity in cryptocurrencies post-release.
At a point when the cryptocurrency market’s mood was turning optimistic, and Bitcoin was moving into a technical bull market, Zhao made his release.
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2024-09-27 16:24