Bitcoin faces a new threat after US PMI reignites stagflation fears

Recent US PMI data reveals a concerning economic trend: slowing business activity coupled with rising price pressures. This has reignited fears of stagflation, a scenario where economic growth stagnates while inflation remains high. The S&P Global flash composite PMI slipped to 51.4 in March, with a notable divergence between manufacturing (rising to 52.4) and services (slowing to 51.1). Companies are reporting increased input costs and falling employment. This suggests businesses are building inventories to prepare for disruptions and rising costs, rather than responding to increased demand. Consequently, traders anticipate the Federal Reserve will maintain higher interest rates for longer, which typically negatively affects risk assets like Bitcoin. Bitcoin dipped slightly after the report's release, falling below $70,000. The data suggests the Fed may have less room to cut rates, and the situation is exacerbated by rising energy prices due to geopolitical tensions. While some argue Bitcoin could benefit from eroding confidence in traditional policies, the current market focus remains on sustained higher interest rates, posing a challenge for the cryptocurrency.

(Source：CryptoSlate)