, ethereum, XRPXRP
and other major cryptocurrencies have been stuck in a rut recently, despite a “monster crypto killer-app” potentially priming the market.
The bitcoin price has almost doubled so far this year, rocketing as China stages a surprise crypto flip, Tesla billionaire Elon Musk pulls in the pin on a crypto grenade and the world’s largest asset manager readies a bitcoin, ethereum and XRP bombshell.
Now, after payments giant PayPal surprisingly doubled down on crypto, one closely-watch bitcoin and crypto analyst has warned the Federal Reserve is about to trigger that “greatest rug pull ever” and could cause bitcoin price chaos later this year.
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“What we’re doing now is the greatest rug pull in liquidity ever after the biggest pump in liquidity ever,” Bloomberg Intelligence senior macro strategist Mike McGlone told podcaster Scott Melker. “And the fact that I can say that and show the data is still shocking to me.”
McGlone warned that as liquidity continues to decline through the rest of 2023, the bitcoin price could collapse, dragging on ethereum, XRP and the wider crypto market.
The Fed began sucking liquidity out of the system in late 2021, when the bitcoin price peaked at almost $70,000 per bitcoin, and hiking interest rates to drive down soaring inflation in the aftermath of economic shocks caused by the Covid pandemic and global lockdowns.
“Let’s picture ourselves in December. Recession’s kicking in. People are hoping the Fed will ease and they’ll probably going to say, ‘No we’re not, because we still see high inflation,'” McGlone said, adding he’s looking to bitcoin as an early indicator.
“What should be early indications of [recessionary times]? What was the biggest liquidity pump indicator, new technology ever for the last 10 years? Cryptos. The best indication should be bitcoin and that’s where I’m looking for the bleeding occasion from bitcoin and it’s still kind of showing what I expected. It got up to near $30,000 and it’s just not been able to get much above there.”
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Officials are divided ahead of the Fed’s next interest rate meeting, set for September, with many economists and central bank watchers predicting the Fed will hold rates steady at the highest level in just over 20 years.
“Inflation is still significantly above” the Fed’s 2% target, Fed governor Michelle Bowman said last week at an event in Atlanta, it was reported by CNN. “Given these developments, I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation to the FOMC’s goal.”
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