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Inflation in the US may affect the further growth of the cryptocurrency market.
In the first week of August, investors began to buy cryptocurrencies again, returning capitalization close to the highs of July. The demand for virtual assets now largely determines the state of the global economy, fundamental news regarding inflation in the United States.
What will be the trend in the cryptocurrency market next week
The market situation will be determined by US inflation data. If a fall in consumer price growth is recorded, then the Fed may lower the rate increase.
Recall that the sharp tightening of monetary policy has become one of the main reasons for the start of the fall of the cryptocurrency market this year. High inflation in the US has become a global problem, cutting off the flow of liquidity and investment in stocks and cryptocurrencies.
Due to the increase in the Fed rate, a technical recession occurred in the United States. Now the Fed is forced to slow down the pace of monetary tightening to stimulate GDP. Unless, of course, inflation starts to fall. Now its figure is 9.1%, this has not been the case for more than 30 years. Experts predicted an acceleration of inflation, but this process significantly exceeded their expectations.
President Biden’s administration needs to bring inflation down as the mid-term Senate elections are about to take place, where his party is certain to be defeated. If price growth slows down, then a pump is possible in the cryptocurrency market. But if inflation rises above 10%, then the opposite effect will occur – the price of Bitcoin and other assets will fall again. The drop will likely be below the psychological $20,000 mark.
Another factor that may have an impact on the cryptocurrency market is the transition to the PoS algorithm of the latest Ethereum testnet. Unless, of course, new problems arise. In general, it is strange that such an event can affect the global cryptocurrency market. For many investors, Ethereum acts as a magical symbol that can bring the market up. Although its digital magic has long been lost.
Thus, next week investors’ attention will be riveted to inflation statistics from the US. If it decreases, then the cryptocurrency market can expect growth, although it is difficult to say how long and stable it will be.
Author: Vadim Gruzdev, analyst Freedman Сlub Crypto News
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