Last Updated on June 25, 2022 by Shounak
Prices for commodities around the world might be about to go down, which could be good for Bitcoin and the rest of the cryptocurrency market. At the time this article was written, the price of one bitcoin trader. (BTC) was $31,300, which is a 4 percent increase from the day before.
This week, the benchmark cryptocurrency did 6 percent better than it did the week before. The price of BTC has finally gone up after going down for seven weeks in a row.
It’s possible that this trend may continue in the near future. Bloomberg Intelligence Senior Commodity Strategist Mike McGlone wrote a study that says there is a chance that the prices of commodities are about to go down.
There is a chance that, like in 2008, the commodities market will go down in the second half of this year. We think the same thing will happen in 2022, and the chance of a similar drop of almost 50 percent is growing. Looking for the best Bitcoin trader check Bitcoin smart.
There’s a chance that the prices of wood and copper going down are an early sign that the higher prices are working.
McGlone says that the war between Russia and Ukraine and a drop in the amount of money in the world are to blame. The expert says that the spread of the COVID-19 disease has stopped the money supply in the United States from going up.
People think the world has moved on from COVID-19, which is the main reason why commodity prices are going up. This happens at the same time that US inflation is high.
The story moves away from the illness, and this point of view fits with that. In the long run, this could be bad news for this industry, but it’s great news for Bitcoin. As McGlone made clear:
If the prices of commodities keep going up, it will be harder for the economy to grow, and the Federal Reserve may feel like it has more power to do something about inflation. Gold’s price may be the highest in the 2H time frame.
Why the Fed wants investments that are risky to lose money?
NewsBTC says that a drop in the price of commodities could make Bitcoin and other risky assets go up. If the Federal Reserve thinks that its plan to raise interest rates is going as planned, it might be less aggressive in the future.
If the price of commodities keeps going up, it “threatens” the growth of the economy. This would show the Federal Reserve that it needs to be more “hawkish,” which would be bad for bitcoin.
As the price of bitcoin, which is linked to traditional stock markets like the S&P 500 and the Nasdaq 100, is currently trading above a key support level, McGlone made the following observations about the situation:
If the S&P 500 stays below 4,000, this means that all risky assets will continue to lose value, especially industrial metals and gold. If share prices keep going down, it will be easier for the Federal Reserve to keep inflation in check.
McGlone says that the market has been less likely to expect more interest rate hikes, which would hurt Bitcoin and stocks even more. It would be bad if this happened. Analysts think that the chance of the interest rate going up has gone down from a high of 2.5 percent to about 2 percent.
After a big drop in the price of traditional stocks, it looks like the United States’ financial institutions are doing a good job of stopping inflation. But McGlone stressed that it is possible that Bitcoin, stocks, and other risky assets may still have a long way to fall:
But the basic potential for what we see as the big reversal of risky assets in 2022 is already clear in these early days. Even though the S&P 500 dropped by 20%, prices don’t seem to have gone down enough.
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