One Thing Could Crash Bitcoin And Crypto In The Coming Months 

The post One Thing Could Crash Bitcoin And Crypto In The Coming Months  appeared first on Coinpedia Fintech News

Recent economic indicators from the United States have ignited concerns of stagflation, casting a shadow over the cryptocurrency market, especially Bitcoin. Prominent crypto trader ELJA has shed light on key developments, including disappointing GDP figures and a significant uptick in core inflation, pointing towards a challenging economic environment.

Fears of Stagflation Loom

According to well-known crypto trader ELJA, the US GDP figures falling drastically short of expectations at 1.6% highlight a weakening economy. Concurrently, the US core Personal Consumption Expenditures (PCE) index surged from 2% to 3.7%, representing an 85% increase. 

𝗧𝗵𝗶𝘀 𝗢𝗻𝗲 𝗧𝗵𝗶𝗻𝗴 𝗖𝗼𝘂𝗹𝗱 𝗖𝗿𝗮𝘀𝗵 𝗕𝗶𝘁𝗰𝗼𝗶𝗻 𝗔𝗻𝗱 𝗖𝗿𝘆𝗽𝘁𝗼 𝗜𝗻 𝗧𝗵𝗲 𝗖𝗼𝗺𝗶𝗻𝗴 𝗠𝗼𝗻𝘁𝗵𝘀…

— Elja (@Eljaboom) April 27, 2024

This dual trend of sluggish growth coupled with mounting inflation is a classic marker of stagflation—a scenario where an economy experiences slow growth alongside rising prices.

However, the fear of stagflation presents a unique challenge for the Federal Reserve (FED). During economic downturns, the FED typically implements rate cuts to stimulate growth. 

Mainly, during periods of rising inflation, the FED resorts to rate hikes to curb price increases. However, with stagflation, where both conditions exist simultaneously, monetary policymakers find themselves in a precarious position.

Bitcoin Could Face Sell Off

Meanwhile, ELJA parallels historical periods of stagflation, particularly in the 1970s and 1980s, when stock markets experienced significant declines. If history repeats, cryptocurrencies like Bitcoin, often influenced by traditional market movements during turbulence, could face intensified selling pressure.

Key Event Ahead: FOMC Meeting

The upcoming Federal Open Market Committee (FOMC) meeting, scheduled in four days, holds critical importance as it will determine the direction of monetary policy in the near term. The decisions made during this meeting could have a profound impact on both traditional financial markets and the cryptocurrency sector in the coming months.

As investors await the outcome of the FOMC meeting, the crypto market remains on edge, closely monitoring economic indicators and developments that could influence market sentiment and asset prices.