Bitcoin Falls in US on 'Stackflation Fears' – BLOX

Bitcoin price has been under considerable pressure since hitting an all-time high of $73,800 on March 14. There are geopolitical tensions in many parts of the world, with US inflation rising and fears of stagnation lingering since last week.

Is there a doomsday scenario in Bitcoin and other risk assets?

Great fear of stagnation?

Deflation is a situation where inflation increases and the economy contracts. It was reported last week that growth in the US economy in the first quarter of 2024 was much slower than initially thought.

“Weaker-than-expected growth in the U.S. economy points to a weaker economy, while higher inflation rates point to an inflationary problem. This remains a thorn in the side of the U.S. Federal Reserve. Thus Analysts at QCP Capital.

It was reported last week that the US economy grew by 1.6 percent in the first quarter of 2024, while double that was expected. The figures compared to Q4 2023 are also very disappointing.

In the last quarter of 2023, the US economy grew by 3.4 percent. Making the situation even more alarming is that the core PCE price index grew by 3.4 percent in the first quarter of 2024.

Inflation is still far from the US Federal Reserve's target of 2.0 percent and the economy is beginning to slow down.

What does this mean for the price of Bitcoin?

The current macroeconomic and geopolitical situation is creating a lot of uncertainty and unfortunately we are seeing this reflected in the Bitcoin price.

Investors find it difficult to logically determine how the general situation will evolve in the short term. There are currently many factors that can have a huge impact on price.

In the long term, the picture remains rosy for Bitcoin. As dramatic as recessions and wars are, they will all eventually drive the money printers and bode well for Bitcoin in the long run.

JP Morgan CEO Jamie Dimon makes a similar point in the above interview with the Wall Street Journal. He sees all sorts of risks that could eventually lead to hyperinflation, which in theory is good for Bitcoin.