Inflated fears
4 min read

Inflated fears

B21 Crypto. We help you stomach cryptoassets.

Cryptic ball: blame it on the FED.

Market sentiment continues turning negative, as a small dip in bitcoin's price led ether and alts to lose support. The second most valuable cryptoasset even tested $1.8k this morning, but has since bounced 8% and is back above the round $2k level. All this was, again, due to the U.S. Federal Reserve's actions, as continued inflation pressure is making global market feel like the Fed will hit the brakes on its actions to boost the economy sooner than expected.

Officially, the Fed is still defending it won't. Even today, its chairman, Jerome Powell, said “conditions in the labor market have continued to improve, but there is still a long way to go" and that the US economy is "a ways off" before the most central banker change their mind. This is aligned with surprise news that the People's Bank China, which has announced measures interpreted as dovish, i.e. as more supportive to the economy, given that COVID's impact is still strongly felt.

Chart art: blame it on inflation.

US inflation climbed higher than expected in the largest monthly increase since 2008. This is why the markets are betting that the Fed will taper its monetary stimulus programs.

Market musings: blame it on tech.

So, what can you expect regarding cryptoasset prices? Well, it's clear we're still in the slow summer. That's typical and we've been covering that effect since April. For the optimistic ones, it's great that ether and alts didn't suffer a major crash once the not-so-key support was breached. For the pessimistic ones, this is just another sign of the ongoing slow bleed, which is affecting meme stocks too.

But, looking back to the bright side, it seems tech stocks are pumping again, with some infamous analysts even suggesting they were being used as an inflation hedge - a narrative typically attributed to bitcoin, which is clearly not boding well on the front. Back in May and June we told you about the relationship between crypto and tech, with the former usually following the latter. So, if tech continues to recover, you can expect cryptoassets to follow-up. If not, the only bullish scenario is if tech investors are taking profits and re-investing them in crypto!

Visual block: blame it on China's crackdown..

The fall in Bitcoin and ether's hashrate shows the decline in mining power caused by China's crackdown. Learn about the specific events here.

Three things: blame it on the NFT bubble.

Tweet tip: blame it on failed forecasts.

Follow Jonathan for great updates regarding the impact of global markets on crypto.

Meme moment: but don't blame it on the memes.

Except on Elon's memes.

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Our newsletter offers opinions and insights from analysts in the cryptoasset space. It is not intended to be investment advice, and should not be treated as such. You must not rely on its information as an alternative to financial advice from a qualified professional. Without prejudice, we do not undertake or guarantee that its information is correct, complete or non-misleading; or that the use of guidance in the report will lead to any particular outcome or result.