Singapore based cryptocurrency investment firm QCP Capital announced today that inflation is suspected to be coming back, and the US economy is indeed showing signs of overheating. Last Friday, non farm payroll employment surged by 256000, far exceeding the forecast of 164000. After the release of macroeconomic data last week, any rumors of an imminent interest rate cut disappeared, and the stock market also fell sharply. The tariffs that may be implemented during the Trump era have also raised more concerns about inflation.
Despite the unfavorable macro environment and lingering rumors about the Silk Road, cryptocurrency seems to have taken a firm stance as the support levels of $91000 and $3100 remain unchanged. The implied volatility is also at a relatively low level and continues to decline, with a slight bearish bias in the front-end market only before Trump's inauguration ceremony.
Although the market response to volatility is not significant, cryptocurrencies have not yet emerged from their predicament. The macro storm is still looming, and the producer price index (January 14), consumer price index (January 15), and initial unemployment claims (January 16) are about to be released, all of which may add fuel to the market fire and increase wages. As the US economy heats up, this week will be a real test for cryptocurrencies to see if they can function as a hedge against inflation.
