11/26/2021
Inflation. We are hearing more and more about how the US is heading towards record inflation. A new variant of COVID is said to be coming and things are getting dicey...fast. Stay safe my friends.
By Omkar Godbole
Nov 25, 2021 at 11:22 p.m. PST
Updated Nov 26, 2021 at 6:02 a.m. PST
The classic risk-off action comes in the wake of reports of a new coronavirus variant detected in Botswana, South Africa, and Hong Kong, which may be vaccine-resistant. If these fears come true, many nations may have to reintroduce the economically painful lockdown restrictions.
“There’s a lot we don’t understand about this variant,” Richard Lessells, an infectious disease physician at the University of KwaZulu-Natal in Durban, South Africa, told multidisciplinary science journal Nature. “The mutation profile gives us concern, but now we need to do the work to understand the significance of this variant and what it means for the response to the pandemic.”
Bitcoin’s decline amid risk aversion in traditional markets suggests the cryptocurrency is yet to find acceptance as a safe haven.
More Inflation?
Lockdowns, if any, would perhaps worsen supply chain disruptions, pushing inflation higher – a positive for bitcoin, given it is widely perceived as a store of value asset. According to JPMorgan, bitcoin’s October rally mainly resulted from the spike in inflation expectations and the cryptocurrency’s inflation hedge appeal.
That said, the U.S. consumer price index (CPI) is already at a three-decade high. A further rise in CPI may see the U.S. Federal Reserve (Fed) prioritize inflation control over growth by unwinding stimulus faster. That could lead to asset price deflation.
Bitcoin, which remains vulnerable to Fed tightening, fell sharply on Nov. 10 after the hotter-than-expected U.S. consumer price index bolstered fears of an early interest rate hike by the Fed.
Minutes from the Fed’s November meeting released on Wednesday shows that officials would be willing to raise interest rates sooner than expected.
