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July’s crypto landscape found itself closely intertwined with the broader financial markets, mirroring the hopes and realities of the U.S. economy’s potential soft landing, according to a Grayscale report.
July’s cryptocurrency trends seemed to mirror the larger economic sentiment surrounding the prospects of a soft landing for the U.S. economy, Grayscale reported. With recent data pointing toward low inflation and consistent growth, the risk of recession appeared to diminish:
“However, a soft landing is not assured, and is now increasingly a consensus view–and therefore already discounted to some degree by markets […] If incoming economic data continue to support the soft landing thesis, the year-to-date rebound in major token valuations can continue. But if the economy stumbles or the Federal Reserve raises real rates further, the crypto recovery may pause over the near-term.”
The Federal Reserve’s comments during the July FOMC meeting further signaled confidence in the economy, reinforcing these market sentiments:
“The Federal Reserve Board staff no longer predict a recession in their forecasts, while redirecting when he was asked about guidance the Fed previously shared in June noting that at least one more rate increase was planned for later in 2023.”
While Bitcoin remained relatively steady, other risky assets, including U.S. regional bank equities and crude oil, performed well. However, cryptocurrencies like Ethereum showed more volatility, particularly after a security incident involving the Curve protocol.
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Author: Emily Tonelli
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