Bitcoin crash ahead? Expert warns higher inflation could whip BTC price to $30K
Bitcoin (BTC) may end up falling to as low as $30,000 if the U.S. inflation data to be released on Wednesday comes any higher than forecasted, warns Alex Krüger, founder of Aike Capital, a New York-based asset management firm.
The market expects the widely-followed consumer price index (CPI) to rise 7.1% for the year through December and 0.4% month-over-month. This surge highlights why the U.S. Federal Reserve officials have been rooting for a faster normalization of their monetary policy than anticipated earlier.
Further supporting their preparation is a normalizing labor market, including a rise in income and falling unemployment claims, according to data released on Jan. 7.
"Crypto assets are at the furthest end of the risk curve," tweeted Krüger on Sunday, adding that since they had benefited from the Fed's "extraordinarily lax monetary policy," it should suffice to say that they would suffer as an "unexpectedly tighter" policy shifts money into safer asset classes.
Excerpts:
The Fed has been buying $80 billion worth of government bonds and $40 billion worth of mortgage-backed securities every month since March 2020. Meanwhile, the U.S. central bank has kept its benchmark interest rates near zero, thus making lending to individuals and businesses cheaper.
But the collateral damage of a loose monetary policy is higher inflation, which reached 6.8% in Nov. 2021, the highest in almost four decades.
So now the Fed, which once claimed that rising consumer prices are "transitory," has switched its stance from expecting no rate hikes in 2022 to discussing three hikes alongside their balance sheet normalization.
“It’s more dramatic than what we anticipated and the Fed’s pivot to a more hawkish stance has been the surprise,” Leo
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