Experts Predict Crypto Prices to Explode to All Time Highs if This Happens
Prices of major cryptoassets could explode higher if US economic data this week indicates that the Federal Reserve could soon be done with their interest rate hikes.
After a strong week for bitcoin (BTC) and many other cryptos last week, traders are now looking for any clues of what could fuel the next leg higher. And with a massive release of important US economic data expected this Wednesday, the positive trigger traders are looking for could come sooner rather than later.
Most important of the data expected on Wednesday will be the Producer Price Index (PPI), which measures the change in prices paid to producers of goods in the US. It differs from the better-known Consumer Price Index (CPI), which is the change in prices paid by consumers, but still gives a good indication of what is happening with inflation.
The number is expected to come in at -0.1, and any reading lower than that could fuel an explosive rally for bitcoin and the broader crypto market.
Earlier this month, the CPI release for December showed that US inflation had fallen to 6.5% annually, down from 7.1% in November. The next CPI release in the US is expected on February 14.
“High inflation is transitory”
Among those who have already predicted a return to lower inflation is the popular crypto trader and economist Alex Krüger.
Writing on Twitter on Sunday, Krüger reminded his followers that the currently high inflation level is “transitory,” and that inflation will trend lower over the long-term due to technology and an ageing population.
“It should be crystal clear bots will make wage inflation evaporate,” he said.
The assets that benefit the most from falling inflation are tech equities and nominal bonds with the longest maturities. These are at attractive price/yield levels for long term investors who hold the falling inflation view. Particularly the latter.— Alex Krüger (@krugermacro) January 15, 2023
Lower inflation is the main factor the Fed is looking for before it will stop its current rate hikes, and eventually return to cutting rates. It is believed that lower interest rates will benefit crypto and virtually all other risk assets.
A strong week ahead
The massive release of economic data on Wednesday happens during a week which is already expected to be strong for crypto by several analysts and commentators.
With BTC establishing itself north of the $20,000 mark, and ETH trading above $1,500, popular influencers such as Ivan on Tech declared that “bitcoin FOMO starts now,” while the pseudonymous on-chain analyst PlanB has said “$15.5k was the bottom” for bitcoin.
My 2 sats on #bitcoin price:— PlanB (@100trillionUSD) January 12, 2023
– November 2022 low of $15,5K was the bottom
– BTC has crossed Short Term Holder (STH) and will rise into 2024-halving and subsequent 2025 bull market. Several on-chain signals confirm STH signal.
– 2024 halving will be >$32K
– 2025 bull market >$100K pic.twitter.com/0QtbeOXwsG
While the PPI is perhaps the best indicator for where inflation is going, the change in retail sales expected on Wednesday will also give an indication of how the economy is doing. The number is expected to come in at -0.8%, down further from -0.6% a month earlier.
Just like weakening inflation, a weakening economy is believed to be something the Fed wants to see before it stops its rate hikes – and potentially allows crypto prices to soar.