The main economic data published Thursday indicate that the American economy could be on the verge of stagflation, a difficult mix of slow growth, a weakening of the labor market and an increase in prices.
Despite these concerns, cryptic market players remain optimistic, rather focusing on the cuts and early signals for traditional market reserve rates as engines for higher cryptography assessments.
“The underlying engine of this market cycle is a monetary back wind, which remains intact, despite the risk of stagflation. Bitcoin and crypto more widely, they do not work as a blanket against risk, as we have seen in past cycles,” Shane Molidor, founder of Forgd of Forgd, he crypto.
The data published Thursday showed that consumer prices increased by 0.4% per month in August, which leads to the higher annualized inflation rate – the highest – the highest since January. It was up 2.7% in July. Meanwhile, the first application for unemployment benefits increased last week at the highest level in four years. At the beginning of this week, the BLS announced a record revision downwards to the jobs created during the year ended March 2025.
Despite the assumed staglflation data, the S&P 500 has reached new heights of all time, while the dollar index dropped by 0.5% to 97.50, while traders focused on the reduced feed rate drops and looked beyond the concerns of inflation.
Bitcoin The main cryptocurrency by market value briefly exceeded $ 116,000, based on his recent bullish technical escape. At the time of writing time, BTC was negotiated at $ 115,244. Altcoins such as Sols’s Sol (GROUND)LINK (LINK)Dogecoin has displayed larger gains on a 24 -hour basis.
Merchants are largely expecting the FED to reduce the rates of 25 basic points to 4% on September 17, with additional discounts scheduled until the end of the year. These prospects are largely unchanged despite the disappointing economic data on Thursday, reporting continuous confidence that the Fed will favor the support of the labor market, looking at the past concerns of sticky inflation.
The Shi, director general of the Crypto Auros market manufacturer, has made an interesting observation that the magnificent 7 pieces – the technological actions with great capitalization known for their domination of the market and their powerful growth potential – seem relatively isolated from the fears of stagflation. The continuous force of so-called MAG 7 corners, which have planned billions of capital and research and development expenses (R&D) Expenditure on AI could grease the feeling of cryptographic bull.
“On stagflation being an imminent threat to the current bull race, the MAG 7 and the S&P 493 have been considerably decoupled in recent times.
Sam Gaer, investment director of the Monarq Asset Management management fund, said that the risk-reversal ratio on the cryptocurrency market remains attractive.
“The traders seem to obtain a” clear “for a drop in rate next week after the IPC and the work data did not deliver any shock or on negative surprises. With these versions behind us – and after the PPI printing softer than expected – we think that the risk / reward continues to promote the advantage”, “
Gaer explained that in a potential stagflationist scenario, the Fed may be forced to prioritize the stability of employment on employment and increase rates, which could lead to temporary aversion or to sale in growth and assets sensitive to liquidity such as shares and cryptocurrencies. However, this would only strengthen the case of long -term cryptographic bull.
“In the medium in the long term, however, this dynamic would more widely strengthen the case of structural bull for bitcoin and crypto, because investors are looking for rare and non -sovereign assets to cover persistent fiatral discharge,” said Gaer, adding that the probability of an prolonged stagflationnary regime is low.
Markus Thielen, founder of 10x Research, said that the trend of disinflation should resume in the coming months.
“Our inflation model and the main indicators highlight a drop in inflation, a backdrop that gives assets risk of running. A cup of 25 bp with advice for more would be calm the markets, not frightening them and prepared the land for a bullish finish for the year,” Thielen told Coindesk.
Extracts out of competition
While Bitcoin and other major cryptocurrencies reach new heights of all time, a limited group of Altcoins is about to undergo significant rallies. In particular, there is an increasing consensus on (GROUND) Price prospects.
“We have experienced a high demand for soil in the past 2 weeks. Solbtc is negotiated at its highest level in seven months and pushes against the psychological level of 0.002, with a strong upward momentum continuing from early August. (or be high) In various soil vehicles, “explained Gaer.
The other favorites among the participants in the industry are the ENA token of Defi Protocol Ethena and its synthetic dollar, the USDE, as well as the hyperliquid -changing media token.
“Younger investors are not interested in slow annualized yields at 7%. Instead, they turn to perpetual markets and exchange with the lever effect, which makes betting more risky with greater upward potential. Hyperliquid is designed for exactly this type of user: it is without permission, always safe and more and more positioned as a high -content budget, Media hyperliquid media token.
He highlighted the advantage of yield that Ethena has as Fed reduction rates, reducing the yield of traditional fixed income instruments and dollars equivalents, such as stablecoins.
Think about it as the popular differential performance strategy on exchange markets, where the currency of a country tends to strengthen when its bond yields increase compared to others, attracting capital flows due to higher yields.
“While the Fed reduces rates and short-term T yields drop, traditional stables like the circle become less profitable and the tokenized base trade of Ethena becomes more lucrative. It is a rare circumstance where the stable yields of Ethena increase as the rates of the Fed fall, which could make the job particularly attractive in the next phase of the cycle of the market,” he noted.
Auros underlined Cro with ground, BNB and hype like key tokens to monitor during the next resumption of the crypto market.
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