Bitcoin Price Correlated With Financial Markets – Bitcoin Magazine

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This is an opinion editorial by Mike Ermolaev, head of public relations and content at Kikimora Labs.

Setting The Context: Global Economy Fundamentals

The economy is still recovering from the COVID-19 outbreak as new problems arise. We are now in a time of rampant inflation with central banks trying to remedy that by raising interest rates.

The U.S. CPI data (consumer price index), released on October 13, came in higher than expected (8.2% year-over-year), negatively impacting the bitcoin price. But inflation is not the only issue, the global economy is also struggling with the energy crisis, affecting Europe more than the U.S., due to its strong dependency on Russian natural gas and raw material.

On the eastern side, the war in Ukraine with ensuing sanctions on Russia, add further geopolitical instability and economic uncertainty. Also, China’s zero-COVID policy is disrupting the supply chain worldwide, and the Evergrande default undermines one of the world’s biggest economies.

If we look at the main currencies, the dollar index looks strong, compared to others. The Federal Reserve raised interest rates by 75 basis points in November, and the Bank of England raised interest rates by the same amount. This policy of quantitative tightening aims to reduce the money supply and mitigate price pressure. It is likely to continue into next year and beyond. However, a global recession and risk of stagflation is still very strong, so no country may feel safe from central bank monetary policy.



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