For the past few days, the price of Bitcoin has not changed much. It may be waiting to see how the new inflation numbers in the US will affect it.
It’s really important to remember that changes in how much money is available in the financial markets are the main thing that affects the price of Bitcoin. So, the policies from the Federal Reserve have a big impact.
The cost of Bitcoin and its connection to inflation in the United States.
After unexpected big jumps on October 23 and November 9, the price of Bitcoin went up to over $35,000 and then over $36,000.
Right now, the most important thing is that the share price has been consistently above $36,000 for the past six days, except for a very short period of time.
This quote has not been used until 9 November this year, even during the busiest times in late October.
It might seem strange that the price of Bitcoin has been staying around the same level for a few days near the yearly highs. But it’s probably just because people are waiting for new data from the US.
Furthermore, it should be noted that the highest price of the year, nearly $38,000, was reached on November 9th. This happened as people were really excited about the price going above $36,000 for the first time in 2023.
Except for one high point, the price has stayed between $36,000 and $37,000 for the past six days.
Bitcoin is waiting for information on how prices are changing in the US.
We have known for a few days that new information about how prices have been changing in the US during October will come out today, on Tuesday 14 November.
So, after the jump on 9 November, it’s possible that the markets may have become more cautious in anticipation of today’s data. Also, on the weekend, the usual stock exchanges are not open.
Today’s data may not be very important in theory.
It’s important to note that the most important thing in this situation is not the overall inflation number, but the core one that doesn’t include food and energy. Actually, what the markets care about most is guessing what the Fed will do next with interest rates, and the Fed looks at core inflation to help make those decisions.
The markets are expecting a number to come out today that is the same as last month’s number, which is 4. 1%
However, for overall rising prices, they anticipate a decrease from 3. 7% to 33%
The way the buying and selling of goods and services by people and businesses is affected.
They think there won’t be any change in core inflation. If they’re right, the markets might not react at all.
If the number is much higher or lower, then everything changes. If the inflation rate is much higher than expected, the stock markets might react very negatively. Investors have been hopeful about the Fed’s policy to control inflation, so high inflation could worry them.
The US now only has a 25% chance. The central bank plans to increase interest rates in January. But there’s a 66% chance that they won’t change rates until March 2024. Yes, they believe there is a 41% chance that they will start lowering the odds in June.
One thing to consider is that if markets think overall prices will go down, then maybe the prices of essential goods might also go down a little. If they react well, the chances of a positive outcome will go up.
The way the government manages money and the digital currency Bitcoin.
The price of Bitcoin goes up or down a lot when there are big changes in how much money is in the financial markets.
Not many banks in the world can really change how much money is available in financial markets, and the Fed is the best at doing this.
For example, from 2020 to 2021, it put a lot of money into the markets and made the prices of risky assets, like cryptocurrencies, go up.
In 2022, when prices went up and there was too much stuff to buy, it had to protect itself and start saving money. The current money rules are making it harder to borrow money because of high interest rates. This is helping to lower the amount of money available and bringing down prices.
Now, the Fed has a decision to make. They have stopped raising interest rates because the cost of living has not gone up much, but they can’t lower the rates yet because the cost of living is still higher than they want it to be.
The markets are trying to figure out what might happen next by thinking about how the Fed will respond as core inflation changes.
Altcoins refer to any cryptocurrency that is not Bitcoin. These can include coins like Ethereum, Litecoin, Ripple, and many others.
Something unusual is happening in the altcoin market.
Ethereum is doing what Bitcoin is doing, but some other cryptocurrencies are going in a different direction with their prices.
In the past week, BTC went up by 5% and ETH by 9%, but Solana went up by 33%, Polygon by 29%, Avalanche by 32%, and CRO by 21%.
However, it’s also possible that this was just a late increase. In simple terms, the prices of BTC and ETH went up a lot in January, and then stayed about the same for a long time until October. Many other types of digital currencies went up in value in January, but then their value dropped again.
As of December 31, 2022, BTC has increased by 121%, ETH by 73%, Polygon by 24%, Avalanche by 57%, and CRO by 62%.
Solana’s SOL has increased by 454% since the beginning of the year, making it the top performer. In 2022, the price of SOL dropped more than other cryptocurrencies because of problems with Terra/Luna, Celsius, and FTX.
The commentary discusses.
Bitfinex experts talked about what is happening now and said:
“We have been discussing the possibility of a new bull market, or the ending stages of a bear market since December 2022 and throughout the rise we have seen in BTC since the beginning of the year.
However, it is important to be cautious. The STH and LTH levels can change, as these are dynamic measures and the realised price could move up as the price has a less pronounced pullback, or the pullback happens at a later date.
The Federal Reserve keeps a close eye on these consumer attitudes, especially since they have been aggressively raising interest rates to fight inflation. Their efforts are aimed at preventing these expectations from influencing consumer behaviour too adversely, and undermine their progress in controlling price hikes.
Despite high employment rates, and wage increases post-pandemic, US households maintain a pessimistic outlook, largely fueled by persistent inflation.
Interestingly, consumer expectations regarding gasoline prices have also increased, contrary to the actual trend of decreasing fuel prices since September, as reported by the US Energy Information Administration.”