This week, Bitcoin hit $30,000 for the first time since June 2022. The big question, of course, is whether the coin of coins can continue this positive momentum and embark on another bull run. From the beginning of 2023, there is now a plus of 82 percent in the books for Bitcoin, but more is needed to really speak of a bull run.
All eyes on inflation
This afternoon we will probably learn more about the continuation of 2023, because then we will receive the new US inflation data. Core inflation (CPI minus food and energy prices) is expected to come in at 5.6 percent. That would mean that core inflation in the United States increased by 0.1 percent in March 2023 compared to February 2023.
This will probably give the Federal Reserve another push to raise interest rates at the May 3, 2023 interest rate meeting. While most people hope for a pause in the hike cycle, this inflation data seems to throw a spanner in the works.
In addition, unemployment in the United States is currently at 3.5 percent and is therefore at a historically low level. For that reason, the Federal Reserve will not be very concerned about a recession at this point, even though it seems to be moving upwards in the data.
Recession a certainty?
In fact, it seems that the Federal Reserve is hoping unemployment will increase in the United States, as they forecast the unemployment rate to be at 4.5 percent by the end of 2023. That may be the only way to get core inflation back to the target of 2.0 percent right now.
So we may be heading for a recession, in which interest rates are also relatively high, because inflation is currently the main target of the Federal Reserve. In that respect, it is difficult to see Bitcoin in store for a fantastic follow-up to 2023.
Personally, I am currently hesitant to speak of a new bull market and I am certainly cautious about investing new capital, even if the price is climbing week by week. It may fizzle out, but it all doesn’t look very stable yet. Although there are always things to point out within the economy that do not look stable.