“This is when the deflationary impulse from falling oil prices should remind everyone that the Fed will not hike and that — if anything — the next move will be a cut,” Robin Brooks, a senior fellow at the Brookings Institution and former chief economist at the Institute of International Finance, said in a report.
If there is any doubt about the strength of the currency, then the barrier for bitcoin to rise further also looks weaker. The two are known to be inversely correlated.
However, some observers are urging caution, saying the market is overestimating the impact of oil prices on inflation. Increased price pressure, they say, is now a structural problem.
“The Fed can’t declare victory just because gas prices are moving lower. Sticky service sector inflation is exactly why policymakers are likely to keep interest rates higher for longer even as headline CPI continues to moderate,” said YCC Macro at X.
Markets betting on aggressive easing may be underestimating the persistence of underlying inflation,” added YCC Macro. Be aware!
Read more: For analysis of today’s activity in altcoins and derivatives, see Crypto Markets Today. For a comprehensive list of events this week, see CoinDesk’s “Crypto Week Ahead.”
