CRYPTO NEWS

40-Year High Inflation Surged Another 100bps in June: Tailwind for Bitcoin?

U.S. spenders got a brief respite from rising prices in May. But last month, a torrent of new inflationary pressures on consumer prices moved the Fed’s preferred inflation barometer up to a 40-year high.

The personal consumption expenditures price index tracking the 12-month rate of inflation rose to 6.8% in June. That’s the highest U.S. dollar inflation consumers have seen since the Volcker regime in 1982. Growing inflation through June markedly exceeded Wall Street forecasts.

Moreover, the Bureau of Labor Statistics CPI measure of inflation clocked 9.1% in June. The Federal Reserve created, lent, and spent trillions of new dollars over the past two years.

All that new money is chasing after fewer goods and services as GDP declined through Q1 and Q2. The Fed has meanwhile raised interest rates another round to whip inflation. (Bitcoin pumped on that news this week.)

Investors Are Seeking Shelter as Prices Rise

Inflation was already out of control in April, when Fatherly reported the results of a survey that found 99% of U.S. households have changed their spending routines because of rising prices.

CNN’s Parija Kavilanz reports consumers are cutting back on non-essential spending and impulse shopping. Forbes says people are eating out less, shopping in bulk, and switching to more affordable brands. Investment fund managers and retirees who rely on their services are also looking for ways to weather this cycle’s monetary bubble.

A Global Atlantic Financial Group survey of retirement-aged investors found 3 out of 5 respondents see hedging dollar inflation as a challenge this year.

Bitcoin investors have seen it as an inflation hedge from its inception and continue to today. But not everyone sees it their way.

In May, Fortune’s Taylor Locke filed a report from Bank of America analysts who argued Bitcoin is a risk asset, not an inflation hedge. In June, NextAdvisor pointed readers to the Bitcoin and equities correlation and the cryptocurrency’s deep capitulation this year as evidence the coin is no dollar hedge.

They may have spoken too soon. As the Motley Fool’s Neil Patel explained, time horizon matters in this analysis.

Bitcoin Price Rallied as Inflation Did Its Worst

As recently reported by CryptoPotato:

“Bitcoin price action resembles a bottom formation phase, as it has rebounded from the $17K-$20K range. After creating multiple higher highs and lows over the last few weeks, the market has shown signs of strength, indicating that a bullish trend is shaping, at least in the short term.”

Is it just a coincidence with surging prices, while unrelated factors are at play here? Or is rising inflation leading a Bitcoin price rally? Historically, the price of a coin has tracked along with the expanding rising prices.

An easy glance over the Bitcoin price chart at the 10-yr view alongside the year-over-year inflation rate will do. On a logarithmic scale, there is a noticeable positive correlation between the price of a bitcoin and consumer inflation.

img1_btcinflation
Source: TradingView

It seems Gresham’s Law is still conspicuously at work in currency exchange markets. The law says funny money drives firm money out of circulation and into savings.

Firm attached to SBI Group obtains approval to offer OTC derivatives in US

A prominent Japanese Financial firm, SBI group, has revealed plans to enhance its services and business partners for the digital assets market in the US. The International financial institution aims to venture into the trading of virtual assets derivatives in the United States.  The group disclosed that one of the firms it had stakes in,::Listen

A prominent Japanese Financial firm, SBI group, has revealed plans to enhance its services and business partners for the digital assets market in the US. The International financial institution aims to venture into the trading of virtual assets derivatives in the United States. 

The group disclosed that one of the firms it had stakes in, Clear Markets North America Inc., had gotten an operational license in the country. The firm, a subsidiary of Clear Markets CM, has obtained a license from the Commodity Futures Trading Commission (CFTC). The firm will provide physically settled over-the-counter (OTC) virtual assets derivatives with the license. 

SBI added that the license is a first-of-its-kind issued by the regulatory body’s Swap Execution Facility (SEF) stipulations. Clear Market is prominent in crypto for creating numerous virtual trading outlets. The firm assisted SBI Alpha, the creator of the SBI group virtual market, in creating its trading platform. The firm has conducted a series of testing transactions of its new trading platform. 

Additionally, Clear Market is preparing to inaugurate its OTC virtual assets derivatives offering. The initiative will come with USD/BTC features for institutional investors. Also, the firm intends to enhance the products on its platform as it finds its feet in the industry. Meanwhile, SBI described the license as a vital development for the virtual assets industry in the United States.

The group described how it takes much effort and time to obtain a license for handling crypto assets. SBI further indicated that the approval by the CFTC will help build SBI’s presence in the market.

However, the recent approval by the CFTC is an attempt to enhance its influence over firms that offer virtual asset services. Before now, there has been a controversial debate over the legitimacy of the CFTC and the Securities and Exchange Commission. Though, a bill by Senator Lummis attempts to clearly define the authority of the two bodies over firms in the crypto space. The SEC aims to have well-detailed regulations to see the two regulators work hand-in-hand.

The ongoing lawsuit between Ripple Inc. and SEC highlights the confusing powers between the SEC and the CFTC. Ripple is challenging the SEC’s authority to oversee and sanction its market activities. Expectations are high on the proposed bill to end the confusion between the two regulators. However, the CFTC has urged lawmakers to make laws that will give it more powers to perform its oversight functions. Specifically, the regulators want authorities to have a prominent role in monitoring derivatives and virtual assets labeled as commodities.

Related

Tamadoge – Play to Earn Meme Coin

Our Rating

Tamadoge logo
  • Earn TAMA in Battles With Doge Pets
  • Capped Supply of 2 Bn, Token Burn
  • NFT-Based Metaverse Game
  • Presale Live Now – tamadoge.io

Tamadoge logo

40-Year High Inflation Surged Another 100bps in June: Tailwind for Bitcoin?

Shopping cart
There are no products in the cart!
Continue shopping
0