👉👉👉 ‘Unsustainable’ deficit, inflation means more demand for #Bitcoin : #grayscale
Grayscale suggests that while recent inflation data might pose a short-term challenge for crypto, sustained inflation could create a favorable environment for assets like Bitcoin, which serve as a store of value. According to Zach Pandl, Grayscale's managing director of research, the United States' persistent overspending and high interest rates will drive demand for such assets.
Pandl points out that with the current high inflation, it's unlikely that the Federal Reserve will lower interest rates soon. However, upcoming events like the Bitcoin halving on April 20, along with increasing economic growth and greater adoption of #cryptocurrencies , are expected to support Bitcoin's price.
March's inflation rose by 0.4% month-on-month and 3.5% year-over-year, slightly exceeding economists' estimates. This development disappointed many, echoing Pandl's concerns about the Fed's ability to lower interest rates in the near term due to sustained high inflation rates.
However, Pandl also notes that while an increase in the real interest rate might be a short-term setback for crypto, there will still be ongoing demand for store-of-value assets in the long run.
From a macro perspective, the 10-year real interest rate experienced a notable increase, which could prompt investors to turn to less volatile assets like bonds and term deposits.
Historically, significant spikes in the 10-year real interest rate have coincided with declines in Bitcoin's price. For example, from December 2017 to January 2018, the rate surged by 52.35%, leading to a 28% decline in Bitcoin's price during the same period.
In summary, while short-term challenges may arise due to inflation and interest rate dynamics, the long-term outlook for assets like Bitcoin remains positive, driven by factors such as adoption trends and macroeconomic conditions.
Source - cointelegraph.com