Since the beginning of May, the stock, bond, and crypto markets have been trying to stabilize after a corrective period lasting several weeks, or even months in the case of bonds. However, no sustainable bullish recovery can occur without a resumption of underlying disinflation in the United States.

Bitcoin will rise again as U.S inflation declines

The U.S. stock market has rebounded since May, while the bond market has been recovering since the year’s start. This follows weeks of correction since mid-March.

This attempt at a rebound, which defies the adage “Sell in may and go away,” has been built on the return of “hope” that the Federal Reserve will pivot in the second half of 2024 to avoid stalling U.S economic growth. While the economy is slowing, it still remains significantly above the growth rate observed in Europe.

The U.S. labor market shows signs of decline with rising unemployment rates and ISM PMI indices.
Macro indicators signal economic challenges, including high unemployment and weakening ISM PMI indices.

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However, as long as the U.S. unemployment rate stays below the FED’s warning threshold of 4.1% of the labor force, the FED will remain entirely focused on the trajectory of inflation to guide its monetary policy outlook.

Remember, U.S. disinflation has paused since January, as measured by core CPI or core PCE. This Wednesday, May 15, at 2:30 p.m., the updated CPI will have a decisive impact on the market for the end of May. The market will be closely watching the monthly and annual core CPI readings, which must decrease.

It’s the “services” and “real estate” components that will have a strong influence on U.S. stocks and bonds. Let’s be clear: regardless of the fundamentals of the crypto ecosystem or the specific monetary cycle of BTC, Bitcoin will head toward $100,000 once the “core” U.S. inflation curve resumes its downward trend.

That was my analysis, tell me what you think in the comments !

David