Peak celling
3 min read

Peak celling

Cryptic ball: peak inflation.

Just as anticipated Wednesday, right after dropping below $19k, bitcoin remained within range and began marching back towards $22k. It looks poised to test that level this weekend, but it's still unclear whether it can be broken. What's next?

  • Firstly, as crypto remains very correlated with stocks, it's important to note this move piggy-backed on top of a relief rally performed by equities, which in turn was inspired by better than expected earnings in major banks.
  • Still, the US stonk indexes I like to reference, the S&P 500 and the Nasdaq, closed the week slightly in the red - a bad sign; even if both are forming a potential bottom, which shouldn't be disturbed at least until the summer ends.
  • Potentially, such consolidation - which first started in crypto, a market which also anticipated the equities crash as it has become a purer way to express one's thoughts about global risk assets - will be further helped by a true recovery.
  • Remember these spectacularly high inflation figures are always reported in comparison with the price levels of the same month of the last year. These were relatively low, i.e. below 5%, until May 2021 - and escalated right after.
  • That means it's increasingly difficult for the Consumer Price Index to continue printing elevated figures unless inflation itself is sustained at really hot levels - something quite probable in Argentina, but less so in the US and Europe.

In other words, as inflation fears subside, one can expect businesses to start investing again and sidelined money flowing back to tech stocks and crypto. But this won't happen rapidly. It's still time to be patient and a tiny bit cautious.

Chart art: peak fear.

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Tweet tip: peak survival.

It's that simple.

Meme moment: peak correlation.

It was that easy, but will it continue to be?

FV Bank: the future of custody.

Learn more about how custody needs to evolve to promote the mass adoption of digital assets.

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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 the guidance in the report will lead to any particular outcome or result.