Grayscale, a prominent crypto investment company, has cautioned that macroeconomic variables such as inflation and Federal Reserve policies might slow down the rising trend of crypto values.
This is despite the crypto-market registering a strong February performance, with Bitcoin soaring by 45% and thereby breaching $60,000 for the first time since the year 2021 in November.
He stated that higher inflation will likely prevent the Fed from lessening interest rates, resulting in a powerful US dollar vs cryptocurrencies. Even the increases in the national debt themselves are added to the mess.
On the other hand, Grayscale forecasts inflation to at some point come down to its normal rate level, therefore interest rates can be cut. Investors are recommended to follow the upcoming inflation reports and the Federal Reserve’s policy meeting on March 20th.
However, the perception of the risks did not hinder the inflow of assets into crypto funds in February, with Bitcoin ETFs collecting $6 billion. This increase in Bitcoin purchasing activity, accompanied by Bitcoin’s upcoming halving, which is due in April, could suggest that investors are becoming more interested in cryptocurrencies.
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