By Darren Parkin
Bitcoin and other cryptocurrencies jumped on Wednesday following the announcement that US inflation has fallen to 8.5%, dropping for the first time since April 2022.
Year-on-year headline inflation in the US retreated from June’s 9.1%, which buoyed risk-on assets, including stocks and crypto, as it means the Federal Reserve, the world’s most influential central bank, has more scope not to hike interest rates so aggressively to fight rising prices.
Bitcoin and Ethereum – the largest and second largest digital currencies by market cap – climbed 2% and 7% respectively, just after the inflation print was reported.
However, there is still the issue of rising wages, which will continue to drive core inflation for the time being, but this can be expected to be largely shrugged off by crypto investors.
They are likely to jump on this positive news – they’ve been waiting many months for this after all – and pile further in to Bitcoin and others cryptos.
I think it would be reasonable to assume that if the CPI decline prompts the Fed to slow the pace of its rate hikes from the 75 basis point moves as it next meeting, it’ll provide a trigger for the next crypto bull run.
Another driver for a bull run, as I publicly predicted this week, is growing institutional investment, which has been flagged following the announced that a major US-based asset manager and crypto exchange have partnered to expand access to crypto among institutional investors.
There’s been a groundswell of interest from institutional investors in Bitcoin and crypto in recent months – and this is set to grow exponentially. We can expect a slew of other Wall Street giants to follow suit.
These experts appreciate the inherent value of digital, borderless, global, tamper-proof, unconfiscatable currency in our increasingly tech-driven world.
As these institutional investors are increasingly coming off the sidelines, they bring huge amounts of capital, reputational-pull and expertise to the market, and this will then provide additional confidence for more retail investors.
Again, this jump in institutional interest supports the case for a significant bull-run before the end of the year.
Indeed, I predict that we will see Bitcoin hit fresh all-time highs by the end of the year.
I would not be surprised for it to hit $70,000, which would surpass the previous all-time high of $68,000 in November 2021.
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