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Will Expectations Of Higher Inflation Actually Hurt Bitcoin And Crypto At Least In The Short Term?

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@reonarudo
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Commodities have been in a bull market as the economy has been picking up lately. Inflation has also been going up. Things like timber have seen an uptick. The popular narrative, also in crypto, is that this is caused by "the money printing spree".

As @taskmaster4450 has written many times over, this narrative is not accurate. A better explanation for the recent uptick in inflation is quite logical: when an economy is shut down and re-opened it will take time for supply chains to be up and running at full capacity. This is the Federal Reserve's view also, although they've been saying they will consider slowing down their bond purchasing program if the economy recovers well. All decisions will be discussed and the public will be informed well in advance according to Fed chairman Powell.

Source: https://www.nasdaq.com/market-activity/index/comp

Does that price action of Nasdaq Composite Index look familiar? Cryptocurrencies follow tech stocks.

This is the last year:

An eerily familiar a sight.

When expectations of higher inflation became a talking point, investors reduced exposure to riskier assets. Expectations, based on reality or not, of the Fed slowing down bond purchases means cheaper bond prices and higher yields and some rotation of capital from equities into bond and away from the riskiest of all asset classes, crypto.

Bitcoin moves the entire crypto market. Every little Tribe token on Hive is moved by the rotation described above, initiated by the largest of all whales, the Fed, responding to the overall economy - or investors anticipating its moves.

Posted Using LeoFinance Beta