Lingering inflation impact on digital markets

As you may have noticed last 2 months have been harsh on most digital assets or altcoins despite traditional markets like US equities and gold hitting all time highs. This come at a time of uncertainty with the implementation of Trumps executive orders reshaping international trade and policy.

We have been witnessing a strong Dollar with the DXY index experiencing a sharp increase in the fourth quarter of 2024. This is a reaction to the presidential race outcome with investors pricing in a stronger USD under Trumps' adminatration.

We had expected the CPI to come hotter than expected coming but to our surprise the market had mixed reactions toward this news despite most forecasts pricing in a cooler CPI.

As we can see the start of the current bull market followed the peak in inflation really kicking in with the rapid fall of inflation in late 2022 early 2023.

So now that inflation is back averaging should we just sell everything and leave? Well this is not as easy as that. As you may have noticed we had periods when inflation going up didn't stop those assets from going up either like in 2016 or more recently during the covid pandemic.

I personally think that the weakness we have been saying in the crypto market specially in Altcoins is mostly a crypto problem. Obviously macro economics is at play like we saw but this cycle less only a fractions of coins have been outperforming Bitcoin the rest either stagnating or simply getting rekt with countless projects down more than 80% year to date. too many projects and memecoins just spread capital too thin this cycle and showed that a big part of the industry is just gambling vaporware with no value, but this topic is for another post.

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