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Weak Economic Data Could Help Bitcoin Recover From Recent Lows

Weak Economic Data Could Help Bitcoin Recover From Recent Lows

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Weak economic data could help stocks and virtual currencies, including Bitcoin (BTC), recover from recent lows. by According to Raoul Pal, things can go badly for risky assets like stocks and cryptocurrencies. As he explained, only this week’s weak Economic data can help these two markets find relief. Bitcoin fell below $18,000 a few months ago, and central banks, especially the FED, may continue to raise interest rates in the future.

Could Weak Economic Data Help Bitcoin Recover?

Raoul Pal, investment strategist and founder and CEO of Global Macro Investor, wrote a series of tweets explaining the current global macro environment. In this thread, he mentioned cryptocurrencies and how financial data could help (or not) Bitcoin and stocks recover from recent lows.

While Bitcoin, other virtual currencies and stocks rose in 2021, 2022 turned out to be a challenging year for risk assets. Central banks began raising interest rates as inflation reached its highest level in decades around the world.

In this thread, Raoul Pal explained that if the dollar continues to move in its parabolic trend, things could get worse. In the charts he shared, he explained that the DXY index could rise to 120, the highest level in years. According to what he wrote, it is possible that the DXY index will reach this level in the future.

Raoul Pal wrote on Twitter:

“It could make for a nasty week in risk assets. I don’t think stocks will hit new lows, but I’m not sure. Same with crypto. Personally, I think this week’s weak economic data will save us.”

The highest possible interest rates

It should be noted that central bankers from around the world met last week Friday in Jackson Hole, Wyoming. They made it clear that they may adopt higher rates in the coming months if inflation does not peak or stabilize at current levels.

Inflation in the euro area accelerated in August a new record. Inflation exceeded expectations, accelerating to 9.1 percent from 8.9 percent the previous month. Let’s not forget that the European Central Bank (ECB) has anchored its inflation target at 2%, a far cry from the current level.

The ECB could raise interest rates in the future if it does not see the rate of inflation falling or stabilizing. It is also worth mentioning that the main drivers of inflation were food and energy, both in the double-digit range.

The situation may worsen at the start of the heating season, when energy prices may continue to rise. In addition, underlying inflation has accelerated. It may be possible for inflation to approach 10% in the coming months across Europe.

Interest rates may rise in the euro area in the coming months. At the moment, the ECB has raised interest rates to 50 basis points for the first time in years. However, this does not seem to be very effective in stopping inflation. Therefore, higher interest rates are possible for European countries and the United States in the near future.



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