By Paul R. La Monica, CNN Business
(cnn) – is crypto winter finally over? (and in the scorching heat of summer no less?)
Reading: Makes comeback bitcoin despite ban
Bitcoin prices have stabilized around the $23,000 to $24,000 level after dipping below $20,000 in June.
prices of ethereum and other leading digital currencies have also risen in the last two months, raising hopes that this nascent market has bottomed out.
but optimism could be premature and fleeting. companies with direct ties to the crypto landscape continue to struggle.
coinbase reported a loss for the second quarter after the closing bell on Tuesday. That follows Monday’s revenue warning from NVIDIA, whose graphics cards are a key component in many bitcoin mining rigs.
With all of this in mind, some experts believe bitcoin may be stuck in a tight range for the foreseeable future. so yes, investors may not need to fear that prices will fall much further. but a big rally may not be in the cards either.
“Bitcoin treads water,” Martin Hiesboeck, head of blockchain and cryptocurrency research at uphold, a cryptocurrency wallet company, wrote in a recent report. “the market is subdued”.
hiesboeck added, however, that it is encouraging to see that “every move down is immediately met with huge calls” to buy from large institutional investors. but he expects the dizzying volatility that has become a hallmark of cryptocurrency trading to continue.
“many investors are concerned that the macroeconomic outlook won’t improve any time soon, so they sell every price increase. at the same time, smart investors and institutions seem to think that bitcoin has bottomed out and continues to accumulate” , said. he said, adding that “such moves often lead to excessive price action.”
This kind of volatility could finally subside a bit as more traditional wall street firms enter the crypto market. bitcoin bulls point to a recent deal between coinbase and money management giant blackrock as a promising sign.
See also: Confessions of a Bitcoin Widow: How a Dream Life Turned into a Nightmare | The Walrus
“The partnership between Blackrock and Coinbase is a great deal,” Jack Cameron, co-founder of Luna Market, a metaverse tech and advertising company, said in an email.
cameron added that since “there is still a stigma” associated with bitcoin, having more companies like blackrock dipping into the digital asset sector is good news.
“the more institutional money [that] joins the space, the better it is for all crypto holders,” he wrote.
That may be true. but in the short term, investors may be waiting to see what happens on the inflation front. bitcoin, despite proponents’ hype that it is digital gold, turned out not to be an asset that performs well when inflation pressures build and interest rates soar.
Therefore, investors may first need to see some signs that inflationary pressures are finally starting to peak before deciding to drive bitcoin prices higher. Traders will have a better idea of that after the long-awaited consumer price index (CPI) report for July is released on Wednesday morning.
“Inflation is what killed bitcoin late last year, and if price pressures show significant signs of easing, bitcoin could top its recent trading range,” Edward Moya, Senior Market Analyst for the Americas at oanda, a forex trading company, said in a report.
Is inflation finally starting to cool down?
Inflation is on the minds of consumers, investors, politicians and, of course, the Federal Reserve. Will the pace of price increases finally start to cool down a bit?
Economists polled by Reuters forecast that consumer prices rose 8.7% in the last 12 months. that’s still a historically high level, but it would be a slowdown from the 9.1% rise through June.
Investors recognize that inflation is not going to magically disappear overnight. but any signs that price pressures are starting to ease (even modestly) are to be applauded.
Consumers would also be delighted. My CNN business colleague Nathaniel Meyersohn reported earlier this week that food giant Tyson has seen a big hit from inflation: Shoppers are ditching pricier beef for cheaper chicken. Americans have been routinely confronted with surprise stickers at the supermarket over the past year.
See also: ProShares to Launch the First U.S. Short Bitcoin-Linked ETF on June 21
But there is some good news for consumers who prefer clicks to bricks. My colleague Matt Egan reports that after more than two years of monthly increases in online retail prices, Adobe recently reported that e-commerce prices fell 1% year-over-year in July.
prices of electronics and toys sold online fell by the most. clothing was also cheaper to buy online. but grocery prices rose in July. and online pet product prices rose nearly 13%, hitting a record high in the process.
As a relatively new owner of two kittens, which means I’m now a chewy customer too, I now totally understand the need to spend a lot of money on furry friends.
rising energy costs hit British consumers hard
Inflation is a global problem. And it’s especially painful for UK consumers, who face the prospect of significantly higher energy bills this winter.
my cnn business colleague anna cooban notes that around a third of british households will see their income fall below the poverty line after paying heating bills in the first quarter of 2023.
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That’s because energy costs are expected to more than double by January. energy prices have already soared 54% this year, prompting some Britons to choose between “heat and eat”. The British government approved an aid package earlier this year for consumers to try to alleviate this inflationary burden.
But some argue the support doesn’t go far enough to offset rapidly rising fuel costs. and there may not be any more stimulus checks on the cards either. UK Foreign Secretary Liz Truss, who is the leading candidate to replace Boris Johnson as the UK’s next Prime Minister, has proposed tax cuts… but not more direct aid.
next
US Consumer Price Index for July; earnings from disney, fox corporation, wendy’s and bumble
Coming tomorrow: US Producer Price Index for July; Weekly US Unemployment Claims: OPEC Monthly Oil Report; earnings from cardinal health, blue, hanesbrands, six flags, warby parker and canada goose
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See also: Can I Buy Bitcoin With a Credit Card?
