Economic Uncertainty Is Impacting Bitcoin Price

Share This Post

Bitcoin’s monetary competition is flailing as evidence mounts that the “everything bubble” will soon pop.

The below is from a recent edition of the Deep Dive, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

The FRED Equity-Related Economic Uncertainty Index reached its sixth-highest reading ever today, as liquidity continues to dry up for risk assets. Spikes in this index typically coincide with significant drawdown periods in the S&P 500 Index.

FRED equity market-related economic uncertainty demonstrates fundamental macroeconomic issues and ultimately impacts the bitcoin price.
FRED equity market-related uncertainty corresponds with S&P 500 drawdown.

As inflation has reached 40-year highs in the U.S. (as well as high readings throughout the rest of the world), investment-grade bonds essentially ceased to exist with nominal yields far below the inflation rate without accounting for credit (default) risk whatsoever.

We have continued to state in The Deep Dive that bitcoin’s monetary competition isn’t just gold, but rather the monetary premium that has nestled itself into global bond and even equity markets amidst the everything bubble.

The Everything Bubble

We continue to use the term “Everything Bubble” in The Deep Dive to frame the state of the international monetary system, but what do we actually mean?

The Federal Reserve Board, and its actions as “lender of last resort” for the U.S. dollar (with the dollar serving as the world reserve currency) have acted as a volatility suppression scheme for decades.

Most notably starting with Alan Greenspan and the “Greenspan put” (later to be known as the Fed put), financial markets came to learn that the Fed would save the day by bailing out credit markets and keeping the easy money flowing. Now in 2022, with the Fed’s fund rate still at the zero lower bound, the Fed has become a political liability, and is caught underprepared attempting to tighten as liquidity across financial markets is pulling back.

In The Daily Dive #142 we discussed the implications of the current credit market sell-off:

“The consequences of the falling prices in debt instruments is higher financing costs in the broader economy, as a forty-year high in the consumer price index along with a slightly hawkish Federal Reserve Board has lenders looking for higher yields.

“What should be watched going forward is how credit markets trade, as this has a direct impact on equity markets from a corporate financing perspective but also a market valuation perspective.

“This is something we will keep a very close eye on over the coming months, into a potential Fed rate hike cycle.”

Read Entire Article
spot_img
- Advertisement -spot_img

Related Posts

Toncoin Liquidity and User Activity Reviewed by Analyst: Insights on Market Impacts

Toncoin (TON) has seen notable changes in its market dynamics so far, driven by supply variations and heightened user engagement across its ecosystem Particularly, according to a recent analysis by

Dogecoin (DOGE) Momentum Seems Unstoppable: How High Can It Go?

Dogecoin started a fresh surge above the $0320 resistance against the US Dollar DOGE is holding gains and eyeing more upsides above $04180 DOGE price started a fresh rally like Bitcoin and climbed

XRP Lawsuit News: Legal Expert Says Ripple-SEC Case Could End in 2025, But There’s a Twist

The post XRP Lawsuit News: Legal Expert Says Ripple-SEC Case Could End in 2025, But There’s a Twist appeared first on Coinpedia Fintech News There’s growing speculation that Gary Gensler, the

An Elusive Indian Suspect at the Center of Indiana’s Crypto Fraud

Authorities in Grant County, Indiana, have recovered $36,000 in a cryptocurrency scam involving Prateek Jain, a 33-year-old man from Kolkata, India Jain faces charges of felony fraud and money

XRP Price Gains Steadily with Swings: Can It Maintain Momentum?

XRP price is slowly moving higher above the $06320 support zone The price tested the $07450 zone and is currently correcting gains XRP price started a decent increase above the $06320 resistance The

Bitcoin Price Prediction: Cup and Handle Pattern Hints at Breakout Above $126,000

The post Bitcoin Price Prediction: Cup and Handle Pattern Hints at Breakout Above $126,000 appeared first on Coinpedia Fintech News The Bitcoin bull market is showing no signs of slowing down