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Bitcoin predictably ended Friday with a fall to local lows, after the release of record US inflation. They were announced ahead of time by President Joe Biden, whose words provided the cryptocurrency with a two-day downtrend.
The rise in inflation negatively affects all risky assets, which include Bitcoin and alkoins, which depend on the inflow of investments stimulated by the soft monetary policy of the leading central banks.
Another round of the inflationary spiral on Friday will force the US Federal Reserve System to significantly cut these stimulus next week on Wednesday. Almost simultaneously with this event, the topic of Evergrande and Kaisa will again become relevant. Chinese developers are on the verge of another default, according to Fitch forecasts.
At the end of September, the problems of the PRC developers sent Bitcoin quotes for $ 30,000. Now this effect will be amplified by the release next week of general economic data on China, which can accelerate capital flight from the cryptocurrency market.
However, the PRC authorities have shown that they are ready to neutralize the threat of default by Evergrande. At the beginning of the week, the People’s Bank of China lowered reserve requirements for banks, thereby ensuring the growth of equity markets and Bitcoin.
The European Central Bank also plans to support the economy next week. The ECB may unexpectedly expand its bond buyback program, which will lead to a sharp rise in financial markets. The Bank of Japan and the Bank of England, whose monetary policy meetings are also scheduled for next week, can do the same.
With such an abundance of important financial news, it will be difficult to predict the trends of any risky assets. The only thing that should be noted with confidence is high volatility and an increased degree of panic in the markets. However, it will not affect the holders, who will begin to change their positions only at the end of the year, so the real reaction to the events described will be displayed after December 20th.
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