According to a recent report from ARK Invest, the remainder of 2023 could bring several economic challenges that may delay the much-anticipated Bitcoin bull market. Despite ARK’s bullish view on Bitcoin and its potential to transform corporate operations through the fusion of Bitcoin and artificial intelligence, the investment firm acknowledges the current macroeconomic conditions as potential hurdles.
ARK cites a number of factors contributing to its less-than-optimistic scenario for cryptocurrencies, including interest rate fluctuations, GDP estimates, unemployment, and inflation. The report highlights that the Federal Reserve’s implementation of a restrictive monetary policy for the first time since 2009, as indicated by the natural rate of interest, could create pressure on lending and borrowing rates.
In addition, ARK predicts a slowdown in inflation, which could lead to an increase in the real federal funds policy rate and widen the gap between the natural rate of interest and the real rate. This indicator contributes to the bearish macroeconomic view presented in the report.
The report also focuses on the divergence between real GDP (production) and GDI (income), noting that they should align closely. However, recent data shows that real GDP is approximately 3% higher than real GDI, indicating the possibility of downward revisions in production data.
Unemployment data in the U.S. is another area of concern, with the government revising figures downward for six consecutive months. This trend, similar to what was observed just before the Great Financial Crisis in 2007, suggests a weaker labor market than initially reported.
Furthermore, the writers of the report highlight the potential impact of “stagflation,” which refers to a combination of stagnant economic growth and rising inflation. The reversal of price discounts driven by increased consumer spending signals a possible upward pressure on inflation, adding to the macroeconomic uncertainty.
Overall, the report suggests that the persisting macroeconomic uncertainty may continue in the coming months, raising questions about how cryptocurrency investors would respond to lower economic growth and higher inflation, which are typically considered unfavorable for risk-on assets.
This article is for general information purposes and should not be taken as legal or investment advice. The views expressed are solely those of the author and do not necessarily reflect the opinions of Cointelegraph.
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