July has only just arrived, but there has already been some big news in the crypto community, especially for Bitcoin. Looking back through the past months, Bitcoin did pretty well. Sure, there were some ups and downs, but it’s Bitcoin; of course, it survived and is back on its feet again.
Related: Top Cryptocurrencies of July 2024
However, the atmosphere July is bringing with it is looking a little cloudy for Bitcoin. The recent economic weather in the United States is not giving off the most positive vibes. The current continuing inflation and the Big Tech-fuelled stock market rally have made US traders wonder what will happen to Bitcoin.
And when you look at the figures, it's not hard to figure out why people are getting concerned. GDP, for one, has not been encouraging. Q1 2024 showed a 1.4% jump per information from the Bureau of Economic Analysis, and while it doesn’t look too bad, Q4 2023 saw a 3.4% increase from the quarter before it.
May’s personal consumption expenditures index, one of the inflation indicators, also saw a dip to a 2.6% year-over-year increase compared to April’s 2.7%. Many might call this situation “not cool," but “Economic cooling” is what Jag Kooner, head of Derivatives at Bitfinex, calls it.
Kooner has also warned the market to watch out for a “comeback in volatility,” which, apart from sounding like a Doomsday warning, could possibly cause a Bitcoin buying craze as an alternative investment, especially if traditional trading markets start weakening.
Analysts also think the economic cooldown may spur the US Fed to start cutting interest rates this year, even though it has kept them high for a while now. However, another question is whether cheaper borrowing at lower interest rates would be a good move. While it may be good for the short term, analysts say, it could also flow to risk assets like Bitcoin.
Kooner also thinks that is likely; he said:
Historical trends indicate that during economic slowdowns, investors often turn to Bitcoin as a store of value.
But not all experts are buying into the doom-and-gloom predictions. Pratik Kala, head of research at DigitalX, has said:
Bitcoin is looking for the next major catalyst for a move up. None is on the horizon, but this is expected to change as we near the U.S. elections.
So maybe it's not all bad. After all, Bitcoin just jumped to its highest point in a week on Sunday, nearing $63,000.
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- Bitcoin ETFs Fuel Parabolic Potential. Analysts Predict New Highs Amid Surging Inflows
- Bitcoin Miners Begin Selling Off Their Holdings as Market Reacts
We can only wait, watch, and make some predictions for now, but the real decision-makers have yet to say anything. But we might catch a clue on what the Federal Reserve’s policy might be at the next Federal Open Market Committee meeting, which will take place between July 30 and 31. So, come July 30, get your Sherlock Holmes on, and let us see what will eventually happen.
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