Coinbase's weekly market report on Friday cited macroeconomic data showing the U.S. economy is starting to slow. The report referenced multiple data points on manufacturing, unemployment and domestic demand to support this claim.

Several indicators include the US unemployment rate rising to 4.1% in June and the inverted Treasury yield curve as of mid-2022, a historically strong recession indicator .

Coinbase analysts David Duong and David Han said:

“We think it is very likely that the economy has peaked in the second quarter of 2024 – one of the reasons why we think the US Federal Reserve will cut interest rates starting September 18, this month is the earliest because there is no meeting in August.”

Correlation between crypto and US equities declines | Source: Coinbase

Recession indicators remain present despite optimism about interest rate cuts

According to Coinbase analysts, although an interest rate cut will boost the market, it may not be enough to boost prices if there are fears of a more pronounced decline.

“That said, retail investors may not want to enter into new stock or cryptocurrency positions if the US economy falls into recession.”

However, the Coinbase report indicates that a November election at this level could spur more fiscal expansion, regardless of which candidate wins.

“In our view, that is a strong incentive to buy Bitcoin as an alternative to the traditional financial system.”

They added that ETH could have a surprise outperformance when capital flows into the spot Ethereum ETF start.

Analysts said:

“Overall, we believe the next two months are likely to produce more volatility before things start to improve more seriously towards the end of September.”

Could stimulate the economy ahead in China

According to China's National Bureau of Statistics, the country's consumer price index (CPI) increased by 0.2% in June. This increase is lower than the inflation rate in the previous 3 months and lower than forecasts of the authorities. economist about a 0.4% increase.

The lower CPI index points to weak domestic demand, falling consumer confidence amid a prolonged national real estate slump and worries about jobs and wages. Recent import data also shows a weaker domestic market, which hit a four-month low last month, falling 2.3% – below forecasts.

These weakening domestic market conditions may prompt Chinese monetary policy officials to discuss the need for economic stimulus to revive the national economy. The major meeting of top officials of the ruling Chinese Communist Party, known as the Third Plenum of the 20th Central Committee of the Communist Party of China (CCP) will take place from Monday to Friday. 5 weeks later.

According to Chatham House's report, the plenum is likely to include an announcement on the economic stimulus package.

Dr. Yu Jie, Chatham House Senior Research Fellow on China, Asia-Pacific Program, said:

“Many international observers have set high expectations for this upcoming plenum, predicting a suitable stimulus package will revive China's sluggish economy in the post-COVID-19 era.”

However, Jie added that any stimulus package would be primarily directed at strategic sectors of geopolitical importance to the CCP, “hardly the policies that private enterprises Global individuals and investors eagerly await and love it."



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