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Reason ๐
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โพ Fear of stagflation
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Recently, US GDP data came in at 1.6%, which was almost 40% less than expectations.ย
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On the other hand, US core PCE rose from 2% to 3.7% (an almost 85% increase).
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This indicates a weakening economy with rising inflation, also called stagflation.ย
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Why is it bad?
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During a weakening economy, the FED usually makes rate cuts to boost the economy.ย
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During rising inflation, the FED usually does rate hikes to control the inflation.ย
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But right now, the FED is clueless, as both things are happening at the same time.
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During the stagflation era of 1970โ80, stocks were one of the worst performers.ย
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Given that crypto usually follows stocks, if the stock market takes a big hit, Bitcoin and crypto will dump even more.
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The next FOMC meeting is in 4 days, which will decide the fate of the market in the coming months.
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