While predictions are a dime a dozen and typically forgotten as soon as they are issued, crypto exchange Bitfinex is going out on a limb and stating that Bitcoin will experience a “surge” during the second quarter.
The thesis is that hotter inflation will delay the Fed’s interest rate cuts. Currently, the odds of a rate cut at the next meeting are low, but the June meeting indicates that the probability of a cut is higher.
According to Bitfinex, they expect Bitcoin to lag equities for now:
“…with the BTC/SPX gap likely closing as Bitcoin drifts toward sub-$80K. But this cool-off phase may be just the setup for a breakout later in Q2: ETF inflows are set to resume, inflation data (CPI, PCE) could nudge the Fed into early cuts, and sovereign buying is back in the narrative. Short-term dip or not, Bitcoin looks positioned to decouple and lead risk assets into the second half of 2024.”
Today’s CPI number indicates a decline in inflation during March, but many questions remain. The tariff melodrama has not gone away in its entirety. The Trump administration has hit the pause button, but China is taking a lashing with dramatic tariffs – something that could increase inflation.
The tariff backtrack saw the probability of a rate cut in May at 16.5%. For June, it stands at a 61.7% probability of a 25 bps cut.
As we know, markets can react dramatically at a moment’s notice. For now, you can expect ongoing volatility. As for Bitcoin, who knows?