In the midst of a brisk February, Rapid rise in Bitcoin Although it rose 45% and broke the $60,000 barrier for the first time since November 2021, leading cryptocurrency asset manager Grayscale issued a warning. Grayscale analysts point out that macroeconomic factors, particularly persistent inflation concerns and the associated impact on Federal Reserve policy, are potential barriers to continued appreciation in crypto values. are doing.
Stubborn inflation and its effects
Grayscale analysts emphasize the significant impact that macroeconomic conditions have on crypto valuations. In particular, they point to the recent acceleration in inflation as a major concern.This development reduces the likelihood of a rate cut by the US federal reservethis is a scenario that could dampen the prospects for further appreciation in crypto valuations.
Analysts demonstrate that the Federal Reserve’s monetary policy and overall economic conditions have a significant impact on crypto asset valuations, highlighting important lessons from the crypto cycle thus far .
Federal Reserve Monetary Policy and Cryptocurrency Evaluation
The Fed's reluctance to cut rates at a time of high inflation could have a dual effect. On the one hand, it could increase the value of the US dollar, and on the other hand, it could negatively impact Bitcoin and, by extension, other cryptocurrencies. Grayscale's commentary comes in the context of the US national debt growing at an alarming rate of about $1 trillion every 100 days, further complicating the inflation story.
Despite these challenges, grayscale The outlook is somewhat pessimistic. The company expects U.S. consumer price inflation to continue its downward trajectory, ultimately prompting the Fed to cut interest rates. However, we urge investors to closely monitor upcoming inflation reports, including the March 12th CPI report, March 14th PPI report, and the Fed's policy rate guidance at its next meeting on March 20th. Investors are warned to do so.
Record inflows into crypto funds indicate strong interest
In contrast to the cautious stance on macroeconomic factors, February saw record inflows into crypto funds. moreover, Bitcoin ETF There was significant interest in the United States, with net inflows totaling $6 billion for the month.
This surge in demand highlights investors' growing interest in cryptocurrencies as a reliable asset class, especially in anticipation of Bitcoin's halving in April. Even before the halving, the imbalance between new demand for Bitcoin and limited new supply is seen as the main driver of the recent valuation increase.
At the same time, Ethereum, the second-largest cryptocurrency by market capitalization, also rose by an impressive 47% in the same month.Anticipating significant upgrades to the Ethereum network and their implications layer 2 blockchain Efficiency has contributed to this positive momentum. Moreover, the Utilities and Services Cryptography sector, which includes projects that have the potential to have synergies with AI technologies, outperformed other market segments, registering a 53% rise.
Also read: Crypto mining (CIFR) rises 6% as Bitcoin mined tops 334 units in February
