- US Inflation for June 2021 beats expectations in a negative manner
- Alternative markets can gain more momentum
- CEX.IO Executive Exptecs prominent Bitcoin and Ethereum momentum
BELGIUM (CoinChapter.com) — The looming threat of inflation cannot be ignored nor refuted any longer. Unlimited printing of money by central banks has created a huge problem globally. Mounting concerns over the impact of the monetary policies can prove beneficial for Bitcoin and Ethereum in the weeks ahead.
Inflation concerns are very real
Whether one “believes” in inflation or not, the result will remain the same.
Consumers will be forced to spend more money on goods and services, a trend that became apparent in the past 18 months. Some attribute this trend to the COVID-19 pandemic, although that is only part of the story. In addition, the massive printing of new money has been going on for decades, yet it accelerated last year. Combined with the negative or non-existing interest rates on savings, a very problematic scenario ensues.
Making matters worse is how the end of the inflation threat is not necessarily in view. Although money printing should slow down again as the world recovers from COVID-19, there is another catalyst lurking in the shadows. Known as consumer-driven inflation, there is a lot of unspent wealth in the hands of consumers. As a result, when businesses reopen and the world returns to normal, there will be a cascading wave of consumer spending.
What makes consumer inflation a problem is how people will drive prices higher themselves.
When people are willing to spend extra money for items they will purchase anyway, products and services will see a price hike. Consumer prices are rising for three months in a row, creating a 5.4% year-over-year increase. Making prices come down again is a challenging endeavor, although not an impossible one. It will take time to do so, yet not everyone has that time at their disposal.
When inflation fears remain present and will likely remain in place for the remainder of 2021, new opportunities are created. Consumers who have excess funds to burn can explore alternative markets, such as Bitcoin and Ethereum. Both crypto assets are still at a relatively low value compared to earlier in 2021. A return to those values is often a matter of time, creating exciting buying opportunities for those willing to take a gamble.
Imminent Price Surge For Bitcoin And Ethereum?
Current inflation woes can prove beneficial to alternative markets under normal circumstances. Precious metals and cryptocurrencies are two key segments to watch in the weeks and months ahead. When traditional markets suffer and offer no immediate improvement, wealth diversification will become prominent. It is not impossible money will flow back to Bitcoin and Ethereum during Q3 2021.
CEX.IO Executive Director Konstantin Anissimov comments:
“Experts expect a 4.9% rating for June but any acceleration may reignite fear that the Federal Reserve of the United States may have to slow down its efforts to revive the economy. As things stand, the Federal Reserve has increased the size of its balance sheet from early 2020 to in excess of $8 trillion – a substantial rise. The reduced pricing is an avenue for market investors to accumulate the coins at a discount while trusting in their abilities to serve as the right hedge against the inherent inflation. Both coins with the renewed buy-ups are likely to retest new price levels at $45,000, and $3,000 respectively.”
As the June inflation rate surpassed the 4.9% target by a significant margin, the thoughts of Mr. Anissimov became more valid. The current outlook for the US economy is not promising, and alternative markets will remain rather appealing.
An injection of capital into Bitcoin and Etheruem is a plausible outcome, although not a guaranteed one. The markets remain relatively bearish for now, indicating there is no wealth transfer to crypto-assets just yet.