Signs of receding inflation from the December 2022 Producer Price Index show that Bitcoin continues to rise above the $16,000 to $17,000 levels it has occupied since the FTX fall.
Bitcoin traded around $21,400, firmly maintaining its gains from the previous two weeks. This suggests that the Fed’s tightening policy is keeping inflation down as his PPI in the US is lower month-on-month.
PPI shows dramatic drop in wholesale costs
Wholesale prices fell 0.5% month-on-month in December 2022, beating expectations of 0.1%. Excluding food and energy, the so-called core PPI rose by a factor of ten in December 2022 from a rise of 0.4% in November 2022.
Final demand PPI for December 2022 rose 6.2% year-on-year, beating analyst estimates of 6.8%, but this year’s core PPI was slightly lower at 4.6%. Retail sales were slightly below expectations, down 1.1% from analysts’ estimates of 1% in December 2022. Without adjusting for inflation, the decline suggests softening consumer demand during the US holiday season.
After the PPI release, Bitcoin rose 0.3% to $21,455, breaking out of the $16,000-$17,000 range earlier this week, and ETH rose 0.8% to $1,580.
The Producer Price Index, released monthly by the U.S. Bureau of Labor Statistics, measures what domestic producers in hundreds of sectors of the economy pay to produce finished goods. When manufacturers pay more to create goods and services, some of that cost is passed on to consumers, which can contribute to inflation. His low monthly PPI means the manufacturer can pass the cost savings on to his end users.
JP Morgan CIO says recession still possible despite investor optimism
Investors are becoming increasingly bullish as the market contemplates the end of central bank tightening policies and the weakening of contagion effects from the implosion of several major cryptocurrencies in 2022.
Bitcoin climbed 28% in the two weeks to January 17, 2023, marking an unseen rally since the asset traded at around $1,000. According to AvaTrade’s Naeem Aslam, Bitcoin needs to break above the $30,000 level for investors to feel safe again.
“We are certainly not out of the woods, and for that we need the price of Bitcoin to rise above $30,000,” he warned.
Bob Michele, CIO and head of fixed income, currencies and commodities at JPMorgan Asset Management, expects rate hikes in February and March 2023, with rate hikes paused later this year I expect to.
With recent employment data revealing weak wage growth and declining unemployment, Michele forecasts a midyear recession followed by further interest rate hikes as rising wages will drive additional inflation. bottom.
“The equation is that inflation won’t go down until wages go down. Wages won’t go down until unemployment goes up,” he said.
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