Popular crypto analyst Nicholas Merten says the near-term fate of Bitcoin (BTC) over the coming weeks will depend on two key macroeconomic events.
In a new video update, the host of DataDash tells his 511,000 YouTube subscribers that the market is waiting for the Consumer Price Index (CPI) report and the last Federal Reserve meeting of the year, both slated for this week.
“Why are people not buying the dip? The reason, in my opinion, is what’s coming up here next week and it has to do with the upcoming inflation numbers from the CPI report as well as the Fed at FOMC meeting.”
The CPI report will be out on December 12th, while the Federal Open Market Committee (FOMC) meeting will happen on December 14th. Merten says that the CPI report, often a mover of crypto markets, will likely reveal higher-than-expected inflation data.
Merten says that while over 80% of the market expects the Fed to raise interest rates by 50 basis points, the hike could be higher depending on the CPI report.
“If the Federal Reserve sees a major upset in the CPI to the downside, meaning that inflation is still incredibly elevated month over month and that the annualized target that they’re aiming to reach of 2% is still far away, then they may very well do an another 75 basis point hike. They may want to prove that they are going to do what’s necessary to get inflation curved right here, right now.”
The analyst says that even if the Fed opts for a lower rate hike than expected, markets will still be under pressure.
“Does this mean the market is just immediately saved? Does this mean that we’re kicking off the next bull run?
No. In fact, if we look at previous bear markets, even as the Fed is starting to pivot and starting to drop the federal funds rate by multiple points, you’ll see that equities still went down. It still underperformed because again, to the point that people say that these things have lagging effects, you can’t just come in immediately, cut interest rates and save the day.”
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