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Goldman Sachs Makes a Shocking Prediction on Inflation
In light of the May Consumer Price Index (CPI) data announcement due tomorrow, Goldman Sachs is projecting inflation to rise from 0.05% points to 0.25% points month-over-month.
Year-over-year core inflation may be at 3.5%, an increase from 2.8% in April, despite easing pressures from labor, housing, and the automotive sector.
“In subsequent months starting in June, we expect to see a larger tariff boost and higher core CPI prints,” an analyst said.
This could limit the desired Fed cuts farther out, but risk assets, such as cryptocurrencies, are reacting positively so far. As a result, Bitcoin has remained over $109,000 over the last 24 hours, and Ethereum is at $2,700, also up today, according to Kraken.
On May 9, a new SEC filing revealed that the Wall Street firm now owns 30.8 million shares of BlackRock's iShares Bitcoin Trust (IBIT), worth approximately $1.4 billion, representing a 28% increase from the previous quarter. This shows that the blue-chip investment bank has raised its stake in Bitcoin.
In May, the economy added approximately 139,000 jobs, but the unemployment rate remained unchanged because the rate of people who were working also remained the same. If hiring slows down even more, the Fed might feel more pressure to loosen policy.
This would be beneficial for digital assets like Bitcoin, which tend to perform well when real interest rates decline. A request that President Donald Trump has made several times to Fed Chair Powell is to cut interest rates.
Another macroeconomic factor that will test Bitcoin's price action is the CPI data. If CPI data shows that inflation is falling or is lower than expected, it could be suitable for the crypto markets.
This is why crypto investors are paying close attention to the CPI: good numbers could make people more optimistic, which would lead to higher prices for risk assets.
A False Breakout
Bitcoin's most recent price action suggests that a longer-term holder is engaging in profit-taking, indicating caution.
The rally that powered Bitcoin's current high of $109,590 appeared to be a false breakout after prices peaked at $111,880 and quickly fell by over 10%.
The pullback was exacerbated by the highly publicized feud between President Trump and Elon Musk, which injected further uncertainty and volatility into the market.
Analysts suggest that if the price breaks below the current support levels, particularly below $97,100, there is a chance of further consolidation or a short-term decline. But for now, the level of $103,700 is a good place to stop.
Analysts at QCP Capital wrote, "Markets remain in limbo. With US CPI data scheduled for release tomorrow, investors are treading cautiously. The risk is that continued diplomatic ambiguity morphs into a headwind for broader risk sentiment."
This article has been published on TheStreet via Yahoo News.
