A widely followed crypto guru is analyzing the potential repercussions of the recent US inflation data for June.
In a new video, pseudonymous Coin Bureau host Guy tells his 71,400 subscribers that last month’s inflation numbers are shocking the markets.
“Wow. 9.1%. That was the US inflation number that we got yesterday for June and, it’s safe to say, it took the market by surprise.
The figure for May was 8.6% and the expectation for yesterday’s announcement was 8.8%. Not many people were saying 9%, but the numbers just keep going up.”
Guy explains the new data means US inflation is at a four-decade high.
After suggesting that these high inflation numbers may not even reveal the full extent of turmoil, Guy dives into the immediate effects of the news.
“On the immediate release of these numbers the markets tanked. That’s because they know what lies around the bend – more aggressive rate hikes.
Prior to the release of yesterday’s inflation numbers, the markets were pricing in a 50 to 75 basis point hike when the Fed meets later this month – that number has now also gone up.
The Fed’s watch tool, which uses interest rate futures, has a 75% probability of a 100 basis point hike in the next Fed meeting.
One whole percent. It may not sound like much to some, but believe me, it is…
[A 100 basis point hike] is looking increasingly likely.”
The pseudonymous crypto analyst explains the Fed is far from the only organization to make such a move internationally – Canada announced a 100 basis point rate hike yesterday and the Bank of England recently announced a 25 basis point rise.
Basis points are financial terms referring to changes in interest rates – one basis point equals 1/100th of a percent. A full one hundred basis points would change interest rates by one percent.
Guy then discusses the possible impacts of the data on the crypto markets.
“When it comes to the impact on markets, it seems as if the crypto markets have rebounded from the initial dump. It also seems that the market has now priced in that 100 basis point number, at least, the interest rate futures.
If we do indeed see a 100 basis point rise, I think it could still lead to a crash in the market. That’s because it’s still a pretty unprecedented move and signals the full severity of the economic maelstrom we find ourselves in.
Perhaps it turns out that the growth picture is less than rosy though and the Fed subsequently decides to go easy on the markets. If it’s less than expected, this could turn out to be a boon for the markets, at least, temporarily.
But, in the short to medium term, I still see so many headwinds… The crypto markets themselves also have unique challenges that are dragging us lower. For example, in addition to Voyager’s bankruptcy yesterday, Celsius finally also entered Chapter 11. There’s likely to be a lot of fallout from this which will be felt by all. Then, of course, you have the Three Arrows Capital saga, which seems to be getting even more contentious by the day.”
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