Crypto bulls Eye Q4 Liquidity Surge Despite Hot Inflation
Some believe that global liquidity trends could set up a rally at the end of the year, despite the fact that crypto faces short-term headwinds from hot inflation data.
Prices rose 0.9% in July, the largest monthly gain in more than three years, dimming prospects for a September Fed rate cut.
As traders reduced their bets on imminent policy easing, Bitcoin and Ethereum fell from their recent highs. Although they anticipate rising global liquidity to support a possible rebound in the fourth quarter, analysts anticipate seasonal weakness in September. Although optimism for a September interest-rate cut has been tempered by a reading of higher-than-expected U.S. wholesale inflation, some analysts believe the crypto pullback could be short-lived as liquidity tailwinds build into the year-end. July saw the largest monthly increase in the Producer Price Index in more than three years, with core PPI rising at the same rate. The data prompted traders to scale back bets on imminent Federal Reserve easing, pressuring Bitcoin and Ethereum from recent highs.
Bitcoin is down 4.2% to $118,200 on the day while Ethereum has slipped 3% to 4,570, Coin Gecko data shows.Kraken’s global economist Thomas Perfumo told Decrypt, “The recent pullback in crypto prices following a hotter-than-forecast reading on core PPI seems to have shaken broader confidence in a Fed rate cut next month.” “Fundamentally, elevated inflation continues to underscore the long-term appeal of crypto assets with fixed or programmatic supply, which are structurally better…