The price of bitcoin (quotation BTC) started the week higher above $ 24.000, following the US Senate's inflation reduction plan. However, it could experience a pullback in the next few days if the following 4 events do not prove positive for the markets.
First, all eyes are on the US inflation report, scheduled for August 10. "The US inflation data will guide the direction of global markets in the coming weeks," says Sonam Srivastava, founder of investment advisor Wright Research.
He sums up that if this week's US inflation data turns out to be worse than expected, we could see some volatility in the markets. Something that could affect bitcoin.
This is because he believes that, as a result, the country's Federal Reserve (Fed) will continue to be hawkish in the coming months. Perhaps with another 75-point interest rate hike, according to projections by Timothy Graf, director of EMEA macro strategy at institutional investment firm State Street.
If inflation were to fall, Srivastava argues, there would be confirmation that the markets are easing. In particular for the second half of the year. According to a Reuters poll, analysts expect the index to drop from 9,1% in the latest report to 8,7%.
Inflation, Fed comments, dollar and China: the factors that could impact bitcoin
Second, attention should be paid to the Fed's speeches, as they could have an impact on the price of bitcoin and the markets in general. In fact, as has already happened in the past, it could happen that even a positive or negative economic data can be perceived by investors on the contrary. This is due to a strong comment from the agency.
In this regard, financial advisor Anuj Gupta, vice president of asset manager IIFL Securities, points out that any hint of hard line by his officials could trigger a massive sell-off of assets. Such a situation could also lead to an increase in demand for US dollars. Perhaps as a hedge, as investors move away from risky assets.
But the strength of the dollar can also be seen in a positive way for investors. The third point to consider is therefore the behavior of bitcoin traders in the face of the movement of the US currency index these days, which opened the week down. In this way, it continues its decline compared to almost a month ago, when it had reached a high of 20 years, reaching parity with the euro.
The US economy has an impact on bitcoin prices
"The US dollar was supported by a combination of stronger US economic data and hawkish comments from regional Fed presidents, which encouraged market participants to reject expectations of a dovish Fed policy turn."
These are the words of MUFG currency analysts Derek Halpenny and Lee Hardman. And they stressed that they believe there is room for further US dollar rally in the near term.
Finally, the fourth event that could affect asset prices, including bitcoin, is the conflict between China and the United States over Taiwan. This situation, as well as the Russian war against Ukraine and all the macro tensions, could lead to market discomfort and significant drops. This is what financial analyst Alberto Cárdenas explained.
