Bitcoin refrains from helping US investors
Rising inflation and 10 consecutive interest rate hikes have led to the US losing confidence in the economy. But does Bitcoin (BTC) help?
The consumer price index (CPI) for all goods has come down to 5%. But daily necessities such as food, electricity and transport services are still expensive. Uncontrollable inflation is causing American citizens to question their leaders.
Investors are losing hope of economic recovery
According to a Gallup poll, CNN Business reported that only 35% of respondents believe President Joe Biden can help the US economy recover. The ratings for Biden are similar to George Bush’s ratings of 34% during the 2008 financial crisis.
48% of respondents have no confidence that Biden would pave the way out of the economic downturn. At the same time, 28% of Americans do not trust the leadership of Federal Reserve (Fed) Chairman Jeremy Powell.
This is because the Fed has raised interest rates for the 10th time in a row, which has caused a cash crunch in the economy. Some believe that the Fed’s aggressive rate hikes have caused the banking crisis in the US
Sky-high inflation
Despite rising interest rates, the Fed has barely managed to control inflation. All-commodity inflation is slowly cooling, as March’s figures indicate 5% year-on-year (YoY) growth and 0.1% month-on-month (MoM). But that in itself is not the whole story.
The screenshot below shows that inflation growth in necessities such as food is still at 8.5%, while shelter is at 8.2%. Similarly for electricity, year-on-year inflation growth is at 10.2% and transport services are becoming expensive at a whopping rate of 13.9%
Can Bitcoin Help US Investors?
Investors rushed to safe havens like Bitcoin and gold due to the banking crisis. While gold is trading near its all-time high, Bitcoin (BTC) has been in a range for around two months.
Despite a 70% gain this year, BTC is down around 12% from its local peak of $31,000. On top of that, it is forming a head and shoulders pattern on a daily time frame. It is a reversal pattern that indicates the end of an uptrend.
A daily close below the neckline of around $27,200 could indicate a trend reversal. Next, Bitcoin may test its next support at around $25,200
Furthermore, there is a regulatory crackdown on crypto in the U.S. Because of the crackdown, Charles Storry, head of growth at crypto index provider Phuture, believes that new money may not enter the market. He told the FT:
Sentiment hasn’t changed, and regulatory scrutiny is sidelining a lot of new money that might otherwise enter the space.
Price movements don’t mean much if the industry doesn’t make meaningful strides to regain confidence and attract new investors,
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