Britain, Canada and the US are facing a 40-year high inflation opposite and find a new level of support.
Three major western countries are now approaching double digit inflation. Great Britain leads the pack with a , just behind the and .
Interestingly, these are all 40-year records for each country, plus or minus a few years. This indicates that the world is entering a new economic cycle. In the meantime has Bitcoin started to stabilize around $20,000 as major players like Michael Saylor double down.
Inflation is skyrocketing in major countries
Given the legacy of the Bretton Woods agreement, it is not surprising that the world’s most powerful central bank, the Federal Reserve, and its actions are likely to have started the global inflationary spiral.
While every country has had its own huge lockdown-related spending, nothing compares to the $5 trillion the Fed has pumped into the economy.
As a result, both the British Bank of England and the Bank of Canada follow the Fed in raising interest rates.
- The Federal Reserve will hike rates by another 0.75% in July, followed by a 0.5% hike in September, economists at Reuters said. The Fed’s current interest rate is 1.58%.
- The Bank of England raised interest rates to a 13-year high of . With the UK close to double digits, BoE chief economist Huw Pill recently noted that the bank should be poised for more aggressive rate hikes.
- The Bank of Canada will almost certainly hike its interest rate by 0.75% on July 13th, from the current 1.5%, which was followed by a 0.5% hike in early June.
Inflation is, of course, a double-edged sword. While it raises the cost of living, fighting inflation raises the cost of capital. This, in turn, triggers an economic slowdown that may end in a recession, as the market sell-off shows. BoE chief economist Huw Pill has already noted this.
“We see ourselves on a narrow path between sustained inflationary pressures and recession,”
Bitcoin finds support above $20,000
Introduced after the 2008 financial crisis, Bitcoin is entering uncharted waters. For the first time in history, Bitcoin represents an alternative P2E payments network outside of the central bank system. One that has no boardrooms, directors, or banks.
Instead, Bitcoin “only” has cryptographic math making up 21 million forever limited coins on decentralized miners. However, Bitcoin also represents a speculative funnel vehicle for the Fed’s money supply.
At the height of the Fed-induced market bubble in November 2021, Bitcoin peaked at $69,000. After market sell-offs, BTC has since deflated by -70%. As we enter a new economic cycle, Bitcoin is experiencing its first major upheaval.
Photo credit: trade view
Although bitcoin dipped into the $18,000 area on Saturday, it quickly recovered. As predicted by the , Bitcoin appears to have bottomed out at $20,000. Below 30, the RSI shows that it is still oversold.
Those who hold BTC are also increasing their Bitcoin acquisitions, a trend that is inversely proportional to the fall in price. So far, over 13,000 new addresses with over 1 BTC have exploited the crash.
Bitcoin – number of addresses
Overall, this marks another shift from weak hands (short-term holders) to strong hands (long-term holders), a process we’ve seen many times before. In theory, it should make Bitcoin more resilient to future market surprises.
But no one can say for sure where the economy is headed in its most extreme scenario. Still, people under 40, confronting an economic crisis for the first time, have something they didn’t have before.
Bitcoin is a limitless and ownerless commodity. It’s subject to market forces, short selling, and whale fakeouts, but so are any other assets. However, over the long term, it seems that whales always side with accumulation.
Source: Crypto News Deutsch