- Unexpectedly high US CPI data has led to a stumble in stocks and bonds, while traditionally inflation-proof assets like oil, gold, and cryptocurrencies have rallied.
- Benjamin Cowen notes inflation remains tight within a 3-4% range, making further reduction hard; he predicts delayed rate cuts, heightening bankruptcy risks.
- Cowen advocates for Bitcoin due to its potential for increased dominance and resilience, offering both upside exposure and minimised downside risk in uncertain economic times.
Stocks and bonds have stumbled after hotter than expected CPI data from the United States has come in. This indicates inflation may be stickier than many had hoped for and the US Federal Reserve’s soft-landing strategy could be in serious trouble.
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As a reaction, inflation hedges such as oil, gold, and cryptocurrencies have rallied – while the Dow Jones, S&P 500 and other indices are down over 1%, Bitcoin is up 2%, while Neo (14%), JASMY (12%) and Toncoin (10%) also gained.
Crypto analyst Benjamin Cowen said that while inflation has shown some fluctuation, it has remained within a narrow range, and reducing it further will be challenging.
All in all, it still is just between the three to 4% range, right? It hasn’t really taken out these highs over here, but it also hasn’t been able to go below these lows.
Benjamin CowenCowen believes rate cuts have now been postponed even further, potentially as late as September, which is not what many had hoped for as many businesses had been expecting several rate cuts this year.
He believes with the current environment there is a chance for Fed policy mistakes which could lead to more bankruptcies and eventually spill over in the labour market – a point when the Fed might be forced to cut rates to avoid broader economic consequences.
Look at United States bankruptcies [ …] they’ve been going up very, very quickly. And those are going to continue to go up more than likely as long as rates continue to stay high and rate cuts keep not arriving. So, at some point, we’re going to reach a threshold where it affects the labour market and then the Fed is going to have to cut so that we try to avoid some type of nasty economic downturn.
Benjamin CowenCurrent Market Conditions Provide ‘Exposure to The Upside’ For Crypto
Cowen’s strategy for navigating the crypto market?
Especially during uncertain times influenced by inflation and other economic factors, Bitcoin advocate Cowen unsurprisingly favours BTC, with its potential for increased dominance as a key reason for his focus.
For crypto, my focus has just been Bitcoin because I think Bitcoin dominance is going up. It gives you exposure to the upside. It minimizes your downside risk.
Benjamin CowenCowen argues that Bitcoin not only offers exposure to the upside of the crypto market but also minimises downside risk compared to other cryptos. This resilience, he suggests, positions Bitcoin to recover faster than other assets from any significant market downturns.
Known for highlighting Bitcoin dominance – something Cowen admits to work into every topic – he notes that dominance has been rising and is expected to continue doing so, especially as rate cuts are delayed. Cowen anticipates that Bitcoin’s dominance could further increase to significant levels before the consumer market weakens.
Bitcoin dominance keeps going up […] But at some point, we reach a level where dominance breaks above 55%, goes to 56% and makes its way probably to 60%.
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