Bitcoin, the leading cryptocurrency, has been under pressure recently due to the Federal Reserve’s prediction of interest rate hikes. Despite this, 10x Research continues to recommend sticking with Bitcoin, especially after the Fed’s announcement of just one rate reduction this year.
According to 10x Research, Bitcoin tends to rally after softer-than-expected Consumer Price Index (CPI) releases. The recent CPI data showed that U.S. inflation was lower than anticipated, leading to renewed confidence in Bitcoin. Even though Bitcoin’s price dipped after the Fed’s rate projections, 10x Research believes that the cryptocurrency will soon resume its upward trend.
Markus Thielen, the founder of 10x Research, emphasized the historical relationship between Bitcoin’s price movements and U.S. CPI figures. When inflation slows down, it typically attracts significant inflows into U.S.-listed spot Bitcoin exchange-traded funds (ETFs). In fact, provisional data from Farside Investors revealed that Bitcoin ETFs received $100 million in inflows on the day of the CPI release, breaking a streak of outflows.
Thielen pointed out that ETF flows into Bitcoin dried up when inflation was high, signaling a lower likelihood of Fed rate cuts. However, when inflation decreased, ETF inflows picked up again, driving Bitcoin’s price higher. Thielen expects this trend to continue, especially as he anticipates the Fed to signal more rate cuts later this year now that inflation has peaked.
Overall, 10x Research’s recommendation to stick with Bitcoin and avoid other cryptocurrencies like Ethereum remains unchanged. The firm’s analysis suggests that Bitcoin is poised for a rebound, especially in light of the recent CPI data and the Fed’s rate cut predictions. Investors are advised to pay attention to economic indicators like CPI releases and Fed announcements to gauge Bitcoin’s future price movements accurately. By staying informed and following 10x Research’s guidance, investors can make well-informed decisions in the volatile cryptocurrency market.