INFLATION DOWNSHIFT

Most people think the bull and bear market is going to last forever, and that this bear market is never going to end. That is not true because all bear markets end but the big question is when? In the bull market, everyone looks like a genius but by the time the bear market starts, that is when the reality of life will hit many investors. It will be based what the action of the federal reserve for us to start seeing a real bull reverse in the crypto market. When the federal reserve decides to stop the rate hike, everything will be back to normal but the inflation has to be under control before we start seeing that.

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Analyst JP Morgan sees that there is an inflation downshift coming because they already start seeing huge shifts in housing. The rent inflation has fallen this year but there is still some high inflation around oil prices. We are seeing a lot of things going around the aspect of oil, we are seeing the Russian price cap in Europe and it going to occur in December. The OPEC cuts are going on and also the U.S turn off the strategic reserves which they have been dumping massively to keep the gas price down before midterms. You should know very well that will have a serious effect on the price of food and some other things.

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If the price of oil keeps going up, the means inflation could remain higher for a very long time but there is another contrary thing we are seeing which is that inflation is falling faster than expected despite all the negative things that are going on. Morgan Stanley believes that the M2 money supply which is falling very seriously is going to be a huge cause of bringing that inflation. It is no longer news that the federal reserve raise interest again by 0.75% but they said that there is potential that the next rate hike will be smaller and it is likely to be 0.5%.

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The federal reserve still has a target of around 5% for the peak of the rate hike but that is when the inflation can be kept down. When the federal reserve stops the rate hiking, it is very likely the crypto market will reverse. Q1 also coincides with the huge crisis when is coming to Europe, it is because energy supplies might not enough to last for winter and that tells you that prices could continue to go up affecting the global energy market. We are seeing industries like metal smelters being forced to shut down, all these things that are going on add to the weight of the uncertainty that the crypto market is experiencing.

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Some like Morgan Stanley who is a financial analyst believe that the bear market will end in 2023 even though it will not be the start of the new all-time high. The end of the bear does necessarily mean that we are going to see prices skyrocketing, the next bull market will definitely come but not the moon.

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