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Grayscale warns of macroeconomic barriers despite Bitcoin’s 45% Feb surge

TL;DR

  • Bitcoin’s price surged by 45% in February, breaking $60,000 for the first time since November 2021 and nearing its all-time high.
  • Grayscale analysts caution that accelerated inflation and the likelihood of sustained high-interest rates from the U.S. Federal Reserve could hinder further crypto valuation increases.
  • Despite the potential macroeconomic barriers, Grayscale remains cautiously optimistic about Bitcoin’s near-term valuation, emphasizing the importance of upcoming inflation reports and Federal Reserve policy updates.

Bitcoin’s value saw a notable increase in February, rising by 45% and breaking the $60,000 barrier for the first time since November 2021. This surge positioned the cryptocurrency within 9% of its highest-ever value. Grayscale, a prominent crypto asset management firm, has identified several macroeconomic factors that could potentially limit further growth in cryptocurrency valuations in the short term. Accelerated inflation over the past month, which has diminished the prospects for interest rate reductions by the United States Federal Reserve, was highlighted as a primary concern.

Grayscale points to macro factors 

Grayscale analysts emphasize the significant influence of macro factors, such as the Federal Reserve’s monetary policy and the overall economic condition, on the valuation of crypto assets. They noted a possible delay in rate cuts by the Fed, possibly extending into late this year or even 2025, should inflation remain high. This situation, they suggest, could bolster the U.S. dollar’s value but negatively impact Bitcoin.

Moreover, the analysts pointed out the rapid increase in U.S. national debt, which is growing by about $1 trillion every 100 days, as a contributing factor to inflation concerns. Despite these challenges, Grayscale remains cautiously optimistic about the near-term future of Bitcoin’s valuation. They predict a continued decline in U.S. consumer price inflation, which could lead to rate cuts by the Fed. Crypto investors are advised to pay close attention to upcoming inflation reports, particularly the CPI report on March 12 and the PPI report on March 14, as well as the Federal Reserve’s policy rate guidance to be updated at its meeting on March 20.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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