The inflation trajectory has not changed positively. The founder of the short-selling institution expects the BTC price to be $10,000

The hot inflation data released on July 14 further increased the possibility of interest rate hikes. The effect of raising interest rates on absorbing funds is obvious, and the pressure on the crypto market is obvious, which has also led to further concerns about the future of cryptocurrencies.

High inflation data and strong interest rate hike prospects

Fed's Bostic said the June inflation report showed that the inflation trajectory was not moving in a positive direction and sustainable job growth indicated that inflation needed to be controlled.

The swap market shows that the probability of the Fed raising interest rates by 100 basis points in July is close to three-quarters. Swap transactions show that the probability of the Fed raising interest rates by 100 basis points in July has increased to nearly 75%. When asked about the possibility of a 100 basis point rate hike in July, Fed Chairman Bostic said that everything is possible.

Economists at Nomura Securities said that we now expect the Fed to raise interest rates by 100 basis points at its July meeting. Investors have increased their bets on a 100 basis point rate hike at the July meeting, which, if true, would be the largest in the Fed's modern history.

"I think they have time, if they want, to change market expectations to 100 basis points," said Michael Feroli, chief U.S. economist at JPMorgan Chase. "I don't think the Fed has given a good reason why they should slow down or take a so-called gradual approach," he said. "If they do raise rates by 100 basis points in July and 75 basis points in September, I think the outlook for economic growth later this year is likely to deteriorate. At this point, I tend to think the main impact of the data may be to prompt the Fed to raise rates more sooner."

Former U.S. Treasury Secretary Summers said that inflation is difficult to disappear. The fiscal outlook will deteriorate rapidly. If the unemployment rate does not reach 6%, we will not be able to get out of the predicament. A significant slowdown is needed to return to normal.

Regulators warn of risks, airdrop institutions voice doubts

The uncertainty brought by the macro-economy has further strengthened the market's concerns about the volatility of cryptocurrencies. IMF Managing Director Georgieva also said that the global economic situation in 2022 is "severe" and the risk of recession in 2023 has increased. Against this background, the crypto field is accompanied by regulatory risk warnings and doubts from short sellers.

On the regulatory front, a recent policy brief from the United Nations recommends that developing countries take action on cryptocurrencies and warns of the risks associated with leaving the industry unregulated. The UN believes that cryptocurrencies could threaten the monetary sovereignty of "developing" countries and recommends strict rules to restrict their use. The adverse effects of cryptocurrencies on these countries far outweigh the benefits they could bring to individuals and financial institutions. The document even recommends that "developing" countries require mandatory registration of all crypto wallets and ban cryptocurrency-related advertising.

Andrew Left, founder of Citron Research, a well-known US short-selling institution, said in an interview that he would not be surprised if Bitcoin fell to $10,000 and Ethereum fell to $200, because they have no utility and are not accepted as a means of payment. He also said that Web3 is a huge illusion, and its purpose is only to take power away from large technology companies.