The storm is not over: markets are waiting for new shocks

July ended on a positive note: Bitcoin showed the best monthly growth since November 2021, and crypto funds showed the best inflow of investments since the beginning of 2022. Nevertheless, the situation in the markets remains more than tense, and a number of experts predict the strongest shocks in the last 50 years.

At the same time, cryptocurrency funds experienced an influx of investments of $474 million.

Predicting the end of the crypto-winter, a number of analysts refer to the Puell multiplier and the return of the market price above the realized one. The realized price shows the average price of the last coin move. Since many coins remain motionless after purchase, the indicator differs from the market value. The current realized price of Bitcoin: $21.8 thousand.

As a rule, the return of the market price above the realized one is a consequence of the end of the bear market. The trap for the investor is that on average Bitcoin takes 197 days to form a bottom. Too little time has passed to call the current puncture of the realized price a bullish signal.

This is also confirmed by network metrics. In particular, the demand for Bitcoin transactions remains lackluster, and the number of active addresses continues to decline. The trend is typical for a bear market.

The main reason for the lack of positivity is the tense macroeconomic situation. Earlier we talked about why the US Federal Reserve has a significant impact on financial markets, including cryptocurrency.

The actions of the regulator were recently criticized by Stanford University economics professor John Cochrane. In his opinion, to curb inflation, the Fed should raise rates to 10-12%. Now the indicator is 2.5%. According to Cochrane, tax, fiscal and monetary policies have lost touch with reality, and the Fed hopes that inflation will stop on its own.

The same assessment is held by Jim Rogers, who together with George Soros created the Quantum Fund. According to the veteran investor, the “worst bear market in his memory” is coming. The US national debt is growing at a staggering pace, and the role of the dollar as the world’s reserve currency is weakening due to aggressive international policy. Many stocks and financial assets will fall by 70-90%.

If the Fed decides to stop the price increase, it will have to raise the rate significantly. Now inflation in the United States is 9.1%, and the price index of personal consumption expenditures has already reached the figures of 1983. If drastic measures are taken, Bitcoin will at best continue to consolidate around $ 20 thousand.