Inflation May Be In A Lull, What Does That Mean For Bitcoin?


In a recent tweet Ben Lilly, co-founder of Jarvis Labs, the on-chain analytics and token design firm, gave his analysis of the past, present, and possible future of inflation and how this can affect Bitcoin and the crypto market. 

According to Lily, inflation has cooled in recent months based on the latest Consumer Price Index (CPI) reports. The numbers might suggest that the economy seems to be in the process of a slow recovery.

However, Lilly states that he is not convinced that the problem has been solved and that inflation might have new phases of spikes that can wreak havoc on global markets.

How Can The Future Of Inflation Affect Bitcoin And The Crypto Market?

In the chart below, Ben Lilly suggests that in the late ’60s and early ’70s, the CPI was recovering after years of recession, with lulls or calming periods before new spikes, but as seen in the following years on the chart, the CPI spiked years later, putting the global market into a new phase of economic depression. 

Lily suggests that we may be in the first lull, which means that inflation will persist. However, he admits it will be more significant when the second wave comes.

In addition, an analyst at Jarvis Labs, in an article published on January 24th, titled “Don’t get caught by the inflation tides,” suggests that we may be entering a “Triple Wave” period of inflation, similar to a period that occurred 50 years ago. 

TD, the analyst’s pseudonym, states that what the markets are experiencing now is a temporary pause between the inflation tide theory explained above. While the market has been in a bullish trend since the beginning of 2023, and CPI shows that inflation is moderating rapidly, there is a potential for a spike in inflation which can negatively impact the price of Bitcoin. 

The Rebirth Of The Bear Market In a Second Tied 

Theoretically, we are in a first lull. Inflation can reverse investor sentiment and prices, with two possible tides coming for the global economy, not only for the U.S. but for all traditional markets and cryptocurrencies. 

Bitcoin has been on cloud 9 in 2023, and so have the majority of cryptocurrencies aiming for new annual highs. Still, with this scenario being a possibility, it can reverse into a new phase of a bear market and unchained inflation. Without the certainties of a wholly healed economy, this should be noted by investors and the crypto industry.

Bitcoin BTC BTCUSDT
BTC’s price moving sideways on the daily chart. Source: BTCUSDT Tradingview

Bitcoin is currently trading at $22,880, with a negative performance of -1.6% in the last 24 hours, still having a profitable week with a growth of 8.3% in the last seven days, climbing to new levels and testing previous support levels that have now turned into resistance walls.

With bearish divergences for Bitcoin and Ethereum in the daily time frame, it could take the market to a significant correction. With throbbing inflation on the horizon, the market could test the 2022 lows and even record new lows. The analyst concluded:

(…) Inflation seems to be tamed – for now. From the markets’ reaction, investors seem to believe we have reached peak inflation, and the Federal Reserve (FED) will resort back to rate cuts and quantitative easing to resuscitate a faltering economy. But not so fast, there are inflationary pressures still hiding underneath the waves.




#Inflation #Lull #Bitcoin

mrB

Related Posts

South Korea to examine crypto staking services following the Kraken case

As reported by a local publication on Feb. 15, Korean financial authorities are looking into the staking services market. However, as the unnamed official specified to the…

Elon Musk Hints At New Twitter CEO At End-2023, Causes FLOKI To Skyrocket 45%

Elon Musk announced in December of last year that he will step down as CEO of Twitter once a replacement is found, but will continue to operate…

Bitcoin eyeing ‘next big move’ which could see $19K retest — analyst

Bitcoin (BTC) is headed to either $28,000 or $19,000 and this week could decide all, fresh analysis says. In Twitter comments on Feb. 15, popular trader Skew…

Messari Analyst Reveals Why Polygon Is Set For Steady Growth

Through his tweet today, Messari analyst Tom Dunleavy singled out Polygon as a top-performing crypto asset and further described traits that set the cryptocurrency for further growth….

Sequoia Capital, Paradigm among VCs facing ‘tricky’ FTX investor lawsuit

Users of bankrupt crypto exchange FTX have reportedly taken aim at financiers who promoted the platform suggesting their efforts added an “air of legitimacy” to the now-defunct…

Sen. Warren vows reintroduction of AML bill that extends to DAOs and DeFi

A bi-partisan anti-money laundering (AML) bill that covers “decentralized entities” such as decentralized finance (DeFi) protocols and DAOs will soon be reintroduced to Congress, according to United…

Leave a Reply

Your email address will not be published. Required fields are marked *