With the year 2022, the crypto world has mainly had an icy and long winter. As of the beginning of the year, both Bitcoin and Ethereum have lost more than 50 percent of their price value. The Merge, the upgrade that marked the transition from Proof-of-Work to Proof-of-Stake for Ethereum, has not changed that much either.
From winter to spring?
The relative stability of Bitcoin and the rest of the industry in recent weeks is at least surprising. While the rest of the financial industry is still struggling with the macroeconomic conditions, Bitcoin is digging its heels in the sand. Is the end of winter in sight and can we slowly get the spring clothes out of the closet? It’s starting to look like it.
This is probably not due to US inflation, some economists surveyed by Reuters expect a CPI of 8.1 percent for September. This would reduce inflation by 0.2 percent compared to August. The decline in the US CPI appears to be mainly due to the 6 percent drop in gasoline prices.
The US CPI will be published on Thursday, October 13 at 2:30 PM. Those figures, together with the minutes of the last important interest rate meeting of the Federal Reserve, should provide clarity about the coming months. Everyone wants to know what the Federal Reserve intends to do with US interest rates.
Interest rate increase of 0.75 percent
For now, the market expects a 0.75 percent rate hike on November 2, when the next Federal Reserve meeting is scheduled. After that, one more meeting is planned for 2022 in December. The expectation for this is now an interest rate increase of 0.50 percent, but a new increase of 0.75 percent is also not ruled out.
Ultimately, it all depends on the economic data, for which Thursday 13 October will be a very important day. If inflation then disappoints, so is a lot higher than expected, then the Federal Reserve will probably intervene harder and that is not good for crypto. If it is not too bad, then winter can finally make way for spring.