Category: Inflation

UK’s 2023 Economic Outlook Report: Inflation Surges, Growth Adjusted Downward

by Blockchain News

The latest report on the UK’s economic forecast for 2023 reveals several pivotal shifts in the nation’s financial landscape. Here’s what you need to know:

GDP Growth

The UK’s projected GDP growth for 2023 has been adjusted downwards to 2.8%, a dip from the previously estimated 3.1%. This modification is influenced by factors such as global supply chain disruptions and the surge in energy prices.

Inflation on the Rise

Inflationary concerns are mounting as the rate is predicted to average 3.5% in 2023, exceeding the Bank of England’s 2% target. The report pinpoints “rising wages and commodity prices” as the main contributors.

Labour Market Health

Signs of recovery in the job market are evident, with the unemployment rate forecasted to decline to 4.2% by the close of 2023.

Housing Sector

A 5.3% average increase in house prices is anticipated for 2023, marking a slowdown from the 7.1% ascent observed in 2022.

Trade Dynamics

The UK’s trade deficit is set to expand to £28 billion in 2023, up from £24 billion the prior year. Reduced exports to EU nations and augmented imports from non-EU countries are highlighted as underlying reasons.

Bank of England’s Strategy

In light of the inflationary pressures, the Bank of England could elevate interest rates to 1.5% by mid-2023.

Brexit’s Continued Influence

The protracted impacts of Brexit remain evident in the UK’s economy. Sectors such as “agriculture and fisheries” are grappling with challenges, particularly in accessing European markets.

Global Economic Context

On the international front, the global economy’s growth is pegged at 3.6% for 2023. The report, however, flags potential risks like “geopolitical tensions” and pandemic-related disruptions.

Government Finances

While public debt as a proportion of GDP is poised to decline to 84% in 2023, the absolute value of this debt is on an upward trajectory. This implies escalating borrowing costs for the government.

Business Investment Focus

Businesses in the UK are gearing up for a 4.7% growth in investments come 2023. Key areas of interest include “technological advancements” and “green initiatives.”

As the UK navigates the complexities of a post-pandemic and post-Brexit world, these forecasts provide a roadmap of challenges and opportunities ahead. Analysts and policymakers alike will be closely watching the interplay of domestic and international factors that shape the UK’s economic trajectory. While the adjustments to GDP growth and the surge in inflation are key focal points, the resilience of the UK’s labor market and the strategic shifts in business investments underscore the nation’s adaptability. The unfolding months will be crucial in determining how these predictions align with real-world outcomes, and whether the proactive measures suggested, such as the Bank of England’s potential rate hike, will be implemented to stabilize and bolster the UK economy.

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

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Astar Network Publishes Tokenomics 2.0: A New Approach to Inflation, Fees, and dApp Staking

by Blockchain News

Astar Network has announced a comprehensive update to its tokenomics, referred to as Astar Tokenomics 2.0, aiming to drive sustainable growth and improve user engagement. The detailed explanation of the changes was posted on the Astar Network forum, and here’s a summary of the key aspects:

Current Tokenomics Overview

The current tokenomics of Astar Network involves a fixed inflation rate of roughly 9.5% per year, with each block emitting 253.08 new ASTR tokens. The distribution of these tokens goes to various actors within the network, including the collator responsible for authoring the block and the on-chain treasury.

Problems Addressed

The new proposal aims to address several issues:

High & Fixed Inflation: The current fixed block reward doesn’t adjust based on network utilization or the number of dApps.

Scalable & Inclusive dApp Staking: The existing dApp staking model needs to be more dynamic and scalable.

Native & Ethereum Fee Alignment: The fees between native Substrate and Ethereum are not aligned.

High Treasury & Collator Rewards: The current allocation to the treasury and collators is considered excessive.

Proposed Solution

The proposed changes are comprehensive and include the following key aspects:

Inflation: The new inflation rate will dynamically adjust every year based on the total supply, with an estimated yearly inflation of around 5.8% if the proposed model is deployed immediately.

Treasury: A fixed rate of 5% of the yearly inflation will be assigned to the treasury.

Collators: Collators will receive 3.2% of the yearly inflation, a reduction from the current rate.

dApp Staking: The new model introduces tiers and makes the system more inclusive for new dApps.

Transaction Fees: The solution aims to align Substrate native & Ethereum fees as closely as possible.

Rent Fees: Rent fees will be reduced by a factor of 100, making on-chain storage significantly cheaper.

Summary of Changes

The main modifications include adjustments to the inflation model, dApp staking protocol, transaction fees, and rent fees. Some of the highlights include:

If TVL (Total Value Locked) is not in the ideal range, not all staking rewards will be minted.

If empty slots are present in dApp staking during a period, the rewards for that period will be burned.

Transaction fees will incur a significant burn, with 80% being burned and 20% being deposited to the collators.

The inflation rate will constantly adjust to on-chain parameters.

Next Steps

The Astar Network team has outlined the next steps, including opening up community forum discussion, sharing the implementation plan & execution, and creating comprehensive documentation.

The proposed changes are seen as progressive steps to elevate Astar’s tokenomics for a sustainable future. The adjustments are not considered final and can be modified as needed for the stability and health of the network.

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Argentina Approves First Regulated Bitcoin Futures Index

by Blockchain News

The National Commission of Value (CNV), the securities regulator of Argentina, has approved the country’s first regulated Bitcoin futures index to debut on the Matba Rofex exchange. The Bitcoin (BTC) futures contract will begin trading in May, making it the first regulated Bitcoin futures index in Latin America. The approval of the Bitcoin futures index is part of Argentina’s strategic innovation agenda, which aims to develop new and creative products in the capital market through public-private collaboration.

The Bitcoin futures contract will be based on the price of BTC provided by various entities in Argentina offering BTC/ARS trading pairs. All trades will be settled in the national fiat currency, and traders will be required to deposit Argentine pesos through bank transfer. To provide and use payment services in the country, an exchange must have a valid contract with a payment services provider registered with the Central Bank of the Argentine Republic.

The launch of the regulated Bitcoin futures index offers qualified investors a safe and regulated way to gain BTC exposure in a transparent environment. However, the CNV has also asked the Matba Rofex exchange to incorporate alerts that warn investors of the risks associated with such financial instruments. With the high inflation rate in Argentina, many citizens have turned to Bitcoin to mitigate its effects. The country’s peer-to-peer Bitcoin trading volume has also hit new highs as a result.

The approval of the Bitcoin futures index comes just a week after Binance announced its expansion to Argentina, indicating the growing interest in cryptocurrencies in the country. Argentina has taken a pro-crypto stance over the years, with crypto adoption nearly double its neighboring countries. The Ministry of Economy recently proposed a bill that encourages citizens to declare their crypto holdings and incentivizes them with tax benefits.

In conclusion, the approval of the Bitcoin futures index in Argentina provides a safe and regulated way for qualified investors to gain BTC exposure in a transparent environment. As the country struggles with high inflation, the launch of the Bitcoin futures contract comes as citizens turn to Bitcoin as a way to mitigate its effects. With a pro-crypto stance and growing interest in cryptocurrencies, Argentina is becoming a favorable destination for crypto-related businesses and investments.

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Bitcoin Surpasses $30,000 Mark, Reaches New High in 2023

by Blockchain News

Bitcoin has been making headlines once again as it surpasses the $30,000 mark, setting a new high for 2023. According to data from CoinGecko, Bitcoin has risen to almost $30,200, a price it has not reached since June 10, 2022. The surge in price is a welcome development for the cryptocurrency market, which has been facing uncertainty over the past year.

In the last 30 days, Bitcoin has recorded gains of nearly 46%, rising to its highest level in ten months on April 11. Experts predict that its price will continue to rise as traders await the United States Consumer Price Index (CPI) report on April 12. The report will provide insight into the Federal Reserve’s efforts to control inflation, and its findings could potentially impact the cryptocurrency market.

The Crypto Fear and Greed Index, which aims to numerically present the current “emotions and sentiments” toward Bitcoin and the cryptocurrency market, has been firmly within the “Greed” territory since last week. Its latest update on April 11 showed a score of 68 out of a possible total of 100, indicating a strong optimism in the market.

The Crypto Fear and Greed Index reached a score of 68 on March 21, marking its highest level since November 16, 2021, just days after Bitcoin’s all-time high of over $69,000 was recorded on November 10, 2021. The index’s continued high scores suggest that the market is bullish about the future of Bitcoin and the wider cryptocurrency market.

Michael Saylor, the founder and executive chairman of business intelligence firm MicroStrategy, has been one of Bitcoin’s most outspoken advocates. He has been leading the charge for corporations to adopt cryptocurrency as a strategic asset, and his efforts have not gone unnoticed. MicroStrategy has added billions worth of Bitcoin to its balance sheet, currently owning 140,000 BTC as of April 5 for a total purchase price of $4.17 billion.

MicroStrategy’s investment in Bitcoin has been profitable, with an average price of roughly $29,803 per coin. The latest price surge means that MicroStrategy has made a gain on its investment, providing further evidence of the cryptocurrency’s long-term potential as a store of value.

MicroStrategy has been steadily increasing its BTC holdings since its first purchase in August 2020, even with the ongoing crypto bear market. Its commitment to Bitcoin and the wider cryptocurrency market has inspired other companies to consider investing in digital assets as a strategic asset.

In conclusion, Bitcoin’s recent price surge is a positive development for the cryptocurrency market, providing renewed optimism for investors and traders. With the United States Consumer Price Index report just around the corner, experts anticipate further growth in the cryptocurrency market, particularly for Bitcoin. As companies like MicroStrategy continue to invest in Bitcoin, the cryptocurrency’s long-term potential as a store of value becomes increasingly apparent.

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“Deutsche Bank share slide fuels global banking fears”

by Blockchain News

The recent decline in Deutsche Bank’s share price has reignited concerns about the state of the global banking system and the possibility of a new financial crisis. As we have seen in the past, major commercial banks are deemed too big to fail, and governments will often bail them out to prevent widespread economic collapse. However, the mounting debt levels of the U.S. government and other countries are raising concerns that this time, the situation may be different.

While politicians may kick the can down the road when it comes to addressing unsustainable debt levels, the market is starting to feel the effects of this issue. The yo-yoing between interest rate hikes and quantitative easing programs by central banks is not designed to solve the systemic issue of government expenditure exceeding income. Instead, the Federal Reserve and U.S. Treasury are working to protect the dollar’s position as the global world reserve currency. This short-term solution may have long-term consequences, including the threat of hyperinflation.

As a result of these economic concerns, some investors are turning to alternative investments such as Bitcoin. The cryptocurrency has often been touted as a potential hedge against inflation due to its limited supply and decentralized nature. Despite criticism from some commentators, the recent rise in Bitcoin’s price suggests that the inflation hedge thesis may be back in play.

However, the relationship between Bitcoin and inflation is complex and difficult to predict. In 2021 and early 2022, inflation was on the rise, and Bitcoin’s price fell, leading many to dismiss the idea that Bitcoin could be an inflation hedge. But some members of the Bitcoin community, such as Steven Lubka, continued to hold this conviction. They argued that the inflation was due to systemic supply chain shocks caused by the pandemic and not monetary inflation. Therefore, the idea that Bitcoin could act as a lifeboat amid the devaluing of the U.S. dollar could still hold true.

Bitcoin’s price decline in the past was also partly due to the unwinding of fraud and leverage from certain players in the cryptocurrency market. As the market continues to mature, the value of Bitcoin as a hard money asset may become more apparent to investors.

In conclusion, the recent decline in Deutsche Bank’s share price highlights the fragility of the global banking system and the potential for a new financial crisis. While politicians and central banks may try to kick the can down the road, the mounting debt levels of governments and the threat of hyperinflation suggest that a historic economic correction may be looming. Some investors are turning to Bitcoin as a potential hedge against these risks, but the relationship between the cryptocurrency and inflation remains complex and difficult to predict.

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Bitcoin Surges as US Inflation Rises

by Blockchain News

Bitcoin, the world’s largest cryptocurrency, experienced a surge in price following the release of the US Department of Labor’s latest Consumer Price Index (CPI) data for February 2023. The CPI, which measures the average change in consumer prices for a basket of goods and services, rose 0.4% last month on a seasonally adjusted basis. The all-items index denoting inflation increased by 6% over the last year, with the Labor Department noting that this was the lowest 12-month increase since September 2021.

The news of rising inflation had a mixed impact on conventional markets, with volatility being reported. However, the cryptocurrency markets reacted positively, with Bitcoin and Ether experiencing surges in price, according to data from CoinMarketCap. This suggests that investors are turning to digital assets as a potential hedge against inflation.

The CPI is calculated by the Bureau of Labor Statistics and is used as an indicator of inflation. It reflects the spending patterns of consumers on items such as food, housing, transportation, clothing, medical care, and recreation. The index is used to adjust wages, benefits, and social security payments for inflation, measure economic performance, and set monetary policy.

The US Labor Department’s statement notes that the shelter index was the largest contributor to the monthly all-items increase, accounting for 70% of February 2023’s CPI increase. Indexes for food, recreation, household furnishings, and operations also contributed. The food index increased by 0.4% last month, while the food at home index rose 0.3%. The energy index decreased by 0.6%, while natural gas and fuel oil indexes also declined in February.

The rise in inflation has been attributed to a number of factors, including supply chain disruptions, increased demand for goods and services, and rising energy costs. These factors have put pressure on businesses to increase prices, which has contributed to the overall rise in consumer prices.

The news of rising inflation comes at a time when the global economy is still recovering from the effects of the COVID-19 pandemic. Many countries are still grappling with high levels of unemployment and reduced economic activity, which has led to concerns about the sustainability of the recovery. The rise in inflation adds another layer of uncertainty to an already challenging economic environment.

In conclusion, the rise in inflation has had a mixed impact on financial markets, with cryptocurrency markets experiencing a surge in price. This suggests that investors are turning to digital assets as a potential hedge against inflation. While the rise in inflation is a concern, it remains to be seen whether it will have a significant impact on the global economy in the long term.

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European Asset Manager Believes Bitcoin is Not Doomed Despite Industry Collapse

by Blockchain News

Despite the recent collapse of the cryptocurrency industry, one major European asset manager, Amundi, believes that digital assets like Bitcoin still have potential. In a recent thematic paper analyzing the state and prospects of the crypto market, Amundi’s chief investment officer Mortier Vincent and macroeconomist Perrier Tristan argued that while Bitcoin has failed to serve as an inflation hedge over the past two years, its limited supply may attract more attention if inflation continues to remain above central bank targets.

Bitcoin’s recent inability to protect investors against rising inflation in 2021 and 2022 has been a cause for concern. However, Vincent and Tristan believe that Bitcoin’s long-term prospects remain positive, particularly due to its limited supply. Unlike traditional currencies, Bitcoin has a finite supply of 21 million coins, which makes it more resistant to inflation. This means that as central banks continue to print money to stimulate economies, Bitcoin’s limited supply may become more attractive to investors seeking a hedge against inflation.

Despite the recent collapse of the cryptocurrency industry, with Bitcoin losing nearly half of its value from its all-time high in late 2021, Vincent and Tristan remain optimistic about the digital asset’s future. They acknowledge that dramatic rises in policy and market interest rates have pressured all asset classes, including Bitcoin. However, they argue that the recent market downturn is not a sign that Bitcoin is doomed to fail. Instead, it may be an opportunity for investors to buy into the digital asset at a lower price.

Overall, while the recent collapse of the cryptocurrency industry may be cause for concern, Vincent and Tristan believe that Bitcoin’s limited supply and potential as an inflation hedge make it a valuable asset for investors. As central banks continue to print money and inflation remains a concern, Bitcoin’s long-term prospects may be brighter than they appear.

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ARK Invest CEO: Crypto Assets Will See Huge Turn

by Blockchain News

The chief executive officer of the cryptocurrency and technology investment business ARK Invest predicts that this year will see a significant shift in the value of crypto assets due to a decline in inflation and a shift in monetary policy by the Fed. Cathie Wood, CEO of ARK Invest and Chief Investment Officer, provided an assessment of the macroeconomic forecast in a video blog post for the firm that was published on January 23.

She said that there were several signs pointing to reduced inflation, which “suggests that the Fed should pivot shortly.” She was referring to the recent pivot that the Fed made.

As the macroeconomic outlook improves and financial constraints are eased, this would be positive for risky assets such as cryptocurrency.

She also said that the company anticipates inflation would decrease to the 2% goal level set by the Fed.

Nevertheless, Wood anticipated that inflation may go below this level and perhaps into negative territory since the money supply has been declining. This is due to the fact that the money supply has been falling.

She said that the market is now awaiting a signal from the Federal Reserve, and she went on to say that “we expect it will happen in the first half of 2023.”

She said that the portfolios that ARK Invest manages ought to perform rather admirably in the event that interest rates are set to fall below forecasts.

ARK operates not just a cryptocurrency asset fund but also a blockchain venture investment fund, a disruptive innovation fund, and six active exchange-traded funds that are centred on technology and fintech (ETFs).

While this was going on, ARK Chief Futurist Brett Winton was discussing artificial intelligence (AI), and he said that advancements in this field will speed up in 2023.

Additionally, he predicted that crypto assets will see a significant change for the better this year. ” Public blockchains, cryptocurrencies, and crypto assets, all of which are going through a turbulent moment right now, are likely to become even more distinguished due to their scarcity in an era of plenty.”

He went on to say that whenever there is a shift in the macro environment and the Federal Reserve “changes its spots,” there is a greater possibility for “growth and value realisation inside the venture and public market area.”

Wood came to the conclusion that the recent technical advances will lead to deflation, which in turn would “create a boom in the goods and services linked with this innovation.”

The most recent action taken by ARK Invest was to realise a profit on a portion of its holdings in Grayscale Bitcoin Trust (GBTC) and then load up on 320,000 shares of Coinbase (COIN), which are now valued at around $17.6 million.

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Bitcoin Braces for Deeper Bear Market as Fed Eyeing Another Big Rate Hike

by Blockchain News

The US Federal Reserve is considering a higher-than-expected interest rate hike next month as inflation persists, according to the New York Times.

“Federal Reserve officials have coalesced around a plan to raise interest rates by three-quarters of a point next month,” according to the New York Times.

The current challenging market conditions come at a time when Fed officials remain unclear about when they could halt interest rate adjustments. The New York Times reported that market observers are betting that this trend will persist until at least December, or perhaps by a meeting next, based on economic projections and statements from the central bank.

Inflation indicates no signs of slowing as Consumer Price Index (CPI) figures show that rates are on the rise, a 6.6% up over the year through September, constituting a 40-year high. With another Fed meeting scheduled for early November, experts are predicting another aggressive rate hike. Even data projects that Fed officials may back a decision to raise rates.

In September, the Fed raised rates by 75 basis points, marking the fifth-rate hike of the year. At that time, the Fed indicated that it was unlikely to be the last rate rise of the year. On October 10, Vice Chair Lael Brainard addressed the issue of rising inflation and said Restrictive monetary policies from the Fed will persist.

Inflation is currently soaring because of various factors, including pandemic demand challenges, the war in Ukraine, and the supply chain’s struggle to keep pace. Despite multiple rate increases, the central bank has not yet been able to get inflation under control.

Last month, Bitcoin dropped below $19,000 shortly after the Fed announced another big rate increase – the fifth consecutive time the institution has raised rates this year. The impacts of each new Fed rate increase continue playing out across the crypto and stock markets as investors react to an uncertain economic environment.

Historic price charts show Bitcoin’s price dropped by at least 10% or more following the Fed meetings in March, May, and June. With these data, crypto investors could be in for another rollercoaster next month.

In an interview aired on Wednesday, market analyst Aaron Arnold projected a further fall of Bitcoin, stating that the current BTC price is already repeating the 2018/19 bear market. According to Arnold, Bitcoin is consolidating at around $19,000 to $20,00,0, just like it was consolidating near $6,000 in 2018.

The trader said while BTC had found a bottom at $6,000 per coin in 2018, the price eventually dropped 50%. Arnold said the risk is repeating itself in the current market. As a result, he stated that BTC could fall to support at $11,000 to $14,000 or drop to $6,000.

A key reason for this is due to the abundance of bearish indicators in the market, which include OPEC oil production cuts, sovereign debt crisis, high inflation, and dollar devaluation.

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Bitcoin Needs to Continue Standing above $19,200 to Dilute Downward Pressure, Analyst Says

by Blockchain News

Bitcoin (BTC) has gained momentum to surge past $19K after dropping to lows of $18.3K after the U.S. inflation data was released on October 13.

Market analyst Ali Martinez believes the leading cryptocurrency should stay above $19,200 to reduce selling pressure because this is a significant level. He pointed out:

“Roughly 2.5 million addresses bought nearly 1.5 million BTC at $19,200. The longer Bitcoin continues trading below $19,000, the higher the pressure these investors will feel to exit their long BTC positions to cut losses short. Consequently accelerating the downward pressure.”

The United States Bureau of Labor Statistics (BLS) published the latest inflation figures with the Consumer Price Index (CPI) for all urban consumers growing by 0.4% in September, Blockchain.News reported.  

As a result, a broad market reaction emerged, sending shivers down the crypto market, with Bitcoin dropping to lows of $18,319. 

Crypto insight provider Santiment stated:

“Thursday has been an expectedly volatile day after inflation data was released. Bitcoin dropped to $18.3k, its lowest price level since September 21st. However, as traders were in the midst of stopping the bleeding, BTC & the SP500 rapidly recovered.”

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Source: Santiment

Even though Bitcoin’s social dominance has dropped based on the back-and-forth experienced in the market, the leading cryptocurrency was up by 3.38% in the last 24 hours to hit $19,623 during intraday trading, according to CoinMarketCap.

Since some traders have been eyeing short-term pumps, this has also caused BTC’s social dominance to decrease. Santiment explained:

“Traders are chasing short-term pumps right now to salvage losses. Weak hands dropped out of crypto in 2022, & long-term traders are waiting for Bitcoin to begin receiving the spotlight again. When BTC social dominance is high, prices typically rise.”

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Source: Santiment

The U.S. Federal System has resorted to interest rate hikes to tame runaway inflation, which has been detrimental to the crypto market. With the latest CPI data being higher than expected, it remains to be seen what move the Fed will take next month. 

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Bitcoin (BTC) $ 26,688.15 0.48%
Ethereum (ETH) $ 1,598.30 1.02%
Litecoin (LTC) $ 64.88 0.55%
Bitcoin Cash (BCH) $ 208.01 0.39%