So, this morning’s data came out, and it was a shocker. Inflation (PPI) actually dropped, even though everyone thought it would rise — totally caught the market off guard. And on top of that, the University of Michigan’s consumer sentiment inflation expectations shot up to 6.7%, which is way higher than we predicted. That’s basically a huge warning sign that inflation could hit double digits soon.
Now here’s the issue: interest rates are still sitting at 4.5%, and the Fed hasn’t started pumping money back into the system (no QE yet), but the market’s already drowning in government debt that nobody seems ready to buy unless the Fed steps in.
Normally on a Friday, markets are just wicky-wacky (lots of indecision), but this time it ended strong — green candles everywhere.
Now let’s break it down real simple with some analogies:
Want to save for retirement? Buy Bitcoin.
Need to top up your mortgage? Go for Ethereum.
Wanna go wild on a luxury hotel staycation? Altcoins are your ticket.
Makes sense, right? Don’t use your retirement money for vacationing, and don’t blow your house funds on some degen coin.
Now, short-term — like tonight or tomorrow — Bitcoin’s probably gonna break out of its current range and do a quick retest. On a weekly basis, it’s already done one leg up and could push again next week before we get a healthy correction.
Altcoins are likely to rally next week too. Why? Because Bitcoin’s kind of in a “wait-and-see” mode until the Fed gives their final say on whether they’ll start printing money again or keep being tight. Wednesday, Jerome Powell is scheduled to talk — could be spicy.
Data-wise, next week’s pretty chill. Not much earth-shattering stuff besides retail sales, Powell’s talk, and housing data. So, yeah, vibes are still bullish.
Think about this: Bitcoin was literally created to fight inflation. Just like interest rates are supposed to fight inflation. But in the short-term, higher interest rates win. Long-term? Bitcoin takes the crown. Because you can’t keep raising interest rates forever — that’s like switching from salmon to cheap fish just to survive.
Now over in China, something interesting happened. Their money supply (M1) jumped, not because their economy’s growing, but because the government is injecting liquidity. That’s like printing money to keep the engine running.
And guess what? When the world has more liquidity sloshing around — especially from big players like China or the U.S. — Bitcoin tends to pump. During COVID, the Fed printed 20% more dollars out of thin air, and Bitcoin hit an all-time high. When inflation hit 9.1%, they jacked interest rates from 0% to 5.5%, and Bitcoin fell to 15K. But that pain didn’t undo a decade of easy money. That’s why, after holding rates high for a year, and nothing really improved — Bitcoin’s hitting new highs again.
Right now, the U.S. has a debt ceiling issue. To inject more liquidity, they’d need to borrow more — but the law doesn’t let them. They’ve hit the cap. And raising rates again? Not likely, even if inflation isn’t under control yet.
Switch scenes to China again: the second-largest source of liquidity globally. Their currency (Yuan) is under pressure. If it gets inflated to kickstart the economy, Bitcoin can surge even more — not because people are buying, but because Bitcoin acts as a hedge. It protects against your money losing value.
You know how your dad says he bought a house for 200 million rupiah and now it’s worth 2 billion? It’s not that the house got better. It’s that the value of money dropped. If you sold it today, you probably couldn’t buy a house with the same specs for 200 mil again.
So, it’s the same with Bitcoin. It’s not that Bitcoin’s magically becoming more valuable — it’s that money is losing value. Gold, houses, Bitcoin… they all “rise” for the same reason: your money buys you less than it used to.
And now? China’s inflating, Japan’s feeling the heat, and both are massive holders of U.S. debt. If they start dumping those bonds, the U.S. dollar index (DXY) could tank. And yeah, when that happens — Bitcoin could jump again.
Oh, and by the way — a wild tweet’s going around that Trump’s finally ditched some terrible advisors, and crypto Twitter is yelling “Bitcoin Jump!!” because of it.
So yeah — inflation’s back, liquidity games are heating up, central banks are cornered… and Bitcoin’s just doing what it was born to do.
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