Crypto tumbles as inflation fears resurface: “Macro Boogieman” haunts bull market

The US is in its election year, but the inflation fears refuse to leave. The previous speculation was that the country would soon bring inflation under control to match the acceptable margin of 2%. It had to happen before the first half of 2024 to allow the Federal Reserve to start cutting rates. Many believe that is far from becoming a reality as inflation fears are back in the market. It has gone on to affect the crypto market, and analysts establish that as a link to explain the downfall in the prices.

For reference, BTC and ETH, the two dominating tokens in the crypto market, are down by 7.58% and 7.70% in the last 24 hours, respectively.

Core inflation has been pictured for 6M and 3M at 3.8% and 4.2% in the same order. What better takes this side is that risk assets played too young to the rising opportunity. S&P and BTC continued to climb at a time when they should not have been ignoring macro signs. Building on that are the increasing bond yields, which roll out the image of the Fed being unable to tame inflation.

There are concerns about that, especially when US2Y has climbed 55 bps and US10Y is rallying simultaneously. US2Y dates back to January when the first hot inflation print was prevalent.

Macro Boogieman is, according to analysts, the biggest fear in the market. It ideally indicates a shift in the focus on taking risks, bottom-up rotations, and narratives. In other words, the focus is more on the individual performance of a company or token than on the overall economic trends.

BTC is relevant here, for most traders got on board when the token began soaring on the trading board. Accumulating Bitcoin was the most preferred choice.

There is a chance that that trend could continue a little longer. Glassnode recently said that Bitcoin was about to enter the Euphoria Zone. That is categorized as a phase on the chart wherein a token, Bitcoin, in this case, marks a new ATH. Driving BTC to the said zone could be the transfer of wealth from old traders to new traders. Those who have made some profits will likely start selling their shares and enable new traders to buy them at a price that later beats the line for a positive return.

The theory is supported by the fact that there is a rising trend of buying the dip in the crypto market. It boosts buying activity when a token, any token, hit a lower value. That is to support the portfolio, enabling traders to take profits home later. It has worked out for many – those who had bought Bitcoin last year when it was rallying at around $20,000. BTC is exchanging hands at ~$67,000. Technical profit has been bagged, and selling is only obvious.

Many members of the community have said that the prices could be down because ETF flows are not fire as the day before. Others assume that the election year may have had some impact, and other factors could have had less impact.

Hodlers are looking to shoot a long-term range with their portfolios. They may shed away a certain portion of it, but it is unlikely that accumulation will stop anytime soon. This is evident from the fact that MicroStrategy continues to back its BTC accumulation.

David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.

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