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Macroeconomic fears resurfaced this week, putting pressure on risk assets, including bitcoin .
Many Fed officials said they were prepared to raise interest rates in half-percentage point increments in upcoming meetings to control inflation – a far-steeper pace of monetary tightening than the usual quarter-point hikes.
The data is expected to show the cost of living in the world’s largest economy rose to an annualized 8.3% in March versus 7.9% in February, according to Dailyfx.
One narrative is that an extra hawkish campaign by the Fed is already priced in and that a high CPI figure could be a non-event.
However, a massive scaling back of rate hike bets would require consecutive weak inflation prints.
Since the start of 2021, the share of items in the consumption basket that have seen very large price rises has increased steadily,” the Bank for International Settlements said in a note published on April 5.
Lastly, bitcoin’s rising correlation with equities means it could underperform traditional store of value assets like gold in the coming months.
“In the current juncture, where the need for inflation hedges is more elevated, it is conceivable to see longer-term commodity allocations eventually rising above 1% of total financial assets globally, surpassing the previous highs,” the JPMorgan strategists wrote in an April 6 note.
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