Benjamin Cowen recently discussed how inflation, or CPI, might impact Bitcoin’s price and the Federal Reserve’s approach.
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Currently, the Fed aims to bring inflation down to 2%. We’re close, with inflation at 2.4%, but Cowen warns that it could quickly rise again, similar to how it did in the 1970s. Because of this risk, the Fed is cautious about cutting interest rates too quickly, as it could lead to inflation rising again.
When it comes to Bitcoin, Cowen notes an interesting pattern from previous rate cuts: Bitcoin tends to rally briefly and then fall again. After the recent rate cut, Bitcoin rose for a couple of weeks before dipping, possibly following this same trend.
Cowen’s takeaway? Investors should stay informed about the Fed’s moves and inflation rates since these can directly impact Bitcoin’s price. By understanding these relationships, crypto investors might make more strategic choices amid economic shifts.
