At new tweets Ben Lilly, co-founder of Jarvis Labson-chain analytics and token design company, providing analysis of past, present, and possible future inflation and how it may affect Bitcoin and the crypto market.
According to Lily, inflation has cooled in recent months based on the latest Consumer Price Index (CPI). report. These figures may indicate that the economy appears to be in a slow recovery process.
However, Lilly stated that they are not sure that the problem has been solved and that inflation may have a new surge phase that could cause havoc in the global market.
How Will Future Inflation Affect Bitcoin And The Crypto Market?
In the chart below, Ben Lilly suggests that in the late 60s and early 70s, the CPI recovered after several years of recession, with periods of calm or calm before new spikes, but as seen in later years in the chart, the CPI spiked years later, putting the global market into a new phase of economic depression.
Lily suggests that we may be in our first pause, which means that inflation will remain. However, he admits it will be more important when the second wave arrives.
In addition, analysts at Jarvis Labs, the article published on January 24th, entitled “Don’t get caught by the tide of inflation,” suggests that we can enter the “Third Wave” period of inflation, similar to the period that occurred 50 years ago.
TD, the analyst’s pseudonym, says that what the market is experiencing now is a temporary pause between the inflation tide theory described above. When tthe market has been in a bullish trend since the beginning of 2023, and the CPI shows that inflation is moderating quickly, there is a potential for a spike in inflation which can have a negative impact on the price of Bitcoin.
The Rebirth of the Bear Market in the Second Tied
Theoretically, we are at the first break. Inflation can reverse investor sentiment and prices, with two tides for the global economy, not only for the US but for all traditional markets and cryptocurrencies.
Bitcoin is already on cloud 9 in 2023, and also the majority of cryptocurrencies are aiming for new annual highs. Still, with this scenario as a possibility, it can reverse to a new phase of bear market and inflation that does not exist. Without the certainty of a recovering economy, this should be noted by investors and the crypto industry.
Bitcoin is currently trading at $22,880, with a negative performance of -1.6% in the last 24 hours, still having a profitable week with a growth of 8.3% in the last seven days, rising to a new level and testing the previous level of support that we have now. become a wall of resistance.
With the bearish divergence for Bitcoin and Ethereum on the daily time frame, it could bring the market to a significant correction. With inflation throbbing on the horizon, the market could test the 2022 lows and even record new ones. Analysts conclude:
(…) Inflation seems to be under control – for now. From the market reaction, investors seem to believe that we have reached peak inflation, and the Federal Reserve (FED) will return to rate cuts and quantitative easing to resuscitate the faltering economy. But not so fast, there are inflationary pressures still lurking beneath the waves.