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The bitcoin price has rocketed by almost 50% since the beginning of the year, boosting the ethereum price and other major cryptocurrencies, as traders brace for a China earthquake.
Now, as analysts pour over the latest economic data for signs of persisent inflation and possible recession, influential investors have predicted the U.S. Federal Reserve could be about to trigger a fresh bitcoin and crypto bull run.
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MORE FROM FORBESThis New Crypto Hype Could Be A ‘Multi-Billion Dollar’ Opportunity As The Price Of Bitcoin And Ethereum SlideBy Billy Bambrough
“I’m super bullish [for bitcoin and crypto] … because I believe in the response of what the monetary and fiscal authorities will do in another unpleasant situation,” former BitMex chief executive and veteran trader Arthur Hayes said during a YouTube interview. “They’ll hand out money to people and they’ll print it.”
However, Hayes warned the bitcoin price could fall back under $20,000 in the short term. “I do think we’re in store for a ‘correlation one’ moment,” Hayes said. “By that I mean everything goes down massively together, bitcoin included.”
The Fed’s ultra-loose monetary policy since the beginning of the Covid pandemic that saw interest rates cut to effectively zero and trillions of dollars added to the Fed balance sheet helped propel the bitcoin price to a peak of almost $70,000 per bitcoin in 2021.
As the Fed has hiked interest rates in an attempt to drive down inflation over the last 12 months the bitcoin price has collapsed to under $16,000, wiping around $2 trillion from the combined bitcoin, ethereum and crypto market.
This year, traders have become increasingly confident the Fed has already won its war on inflation and will pivot to a dovish stance if the economy falls into recession, kicking of a bitcoin price rally that’s spread to ethereum and other major cryptocurrencies.
“The rally in prices around the world since October has been stoked by hopes that inflation would gently decelerate, interest rate hikes would stop and then become rate cuts and as a result the global economy would suffer nothing worse than a soft landing, or even start to soar once more after avoiding an encounter with the ground altogether,” Russ Mould, investment director at brokerage AJ Bell, said via email.
“But investors are starting to wonder once more whether such a golden trifecta is likely as economic data proves resilient, inflation (excluding energy) a little sticky and central bank policymakers continue to talk a tough game. The markets’ current preoccupation therefore seems to be that good news for the economy is therefore bad news for asset prices, as it may force interest rates to go higher for longer than hoped, but the risk of recession is still one that cannot be dismissed lightly, either.”
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MORE FROM FORBESIs This The Real ‘Mysterious’ Reason Behind The Sudden $100 Billion Bitcoin, Ethereum And Crypto Price Boom?By Billy Bambrough
Earlier this month, Robert Kiyosaki, the author of financial advise book Rich Dad Poor Dad predicted a “giant crash” is coming for financial markets, with a “depression possible” that forces the Fed to “print billions.”
Kiyosaki said this scenario could push the bitcoin price to an eye-popping $500,000 per bitcoin. “Why? Because faith in U.S. dollar, fake money, will be destroyed,” Kiyosaki posted to Twitter.