Bitcoin, Ether Suffer Losses as US Stagflation Fears Control Market
Crypto markets are in the red amid renewed fears of stagflation in the United States, the worst-case scenario for risk assets.
Bitcoin, the leading cryptocurrency by market value, was trading near $62,641 at press time, down 1.44% in 24 hours.
Ethereum was trading 3.64% lower at $3,170, and CD20, a measure of the most liquid digital assets, was down 3.23% at 2,166 points.
The market appears to be on the edge of a cliff right now as it debates which direction to take, with major bullish and bearish narratives on the horizon.
As QCP wrote in a note over the weekend, the threat of stagflation (a period of high inflation and low growth) is very real.
"Weaker-than-expected [US] GDP figure points to a slower economy, while higher core PCE warns of an inflation problem that remains a thorn in the Fed's side." "QCP wrote.
The stagflationary combination of a slower growth rate and persistent inflation has further weakened the likelihood of the Federal Reserve cutting rates.
QCP also wrote that Janet Yellen's fiscal strategy, leveraging the Treasury General Account (TGA), which holds nearly $1 trillion in assets, and the Reverse Repurchase Program (RRP) with $400 billion, could inject up to 1.4 trillion dollars in liquidity to the financial system, driving up all risk assets.
