US Economic Slowdown: A Silver Lining for Cryptocurrency Growth, Says Expert

The easing of inflation concerns in the United States and optimism about potential interest rate reductions by the Federal Reserve are favorable developments for cryptocurrencies. This insight was shared by BRN’s leading analyst, Valentin Fournier, in a comment to The Block.

*“As inflation approaches the Federal Reserve’s target of 2%, expectations for multiple rate cuts are intensifying. This could trigger a fresh wave of liquidity injections, benefiting alternative risk assets like cryptocurrencies more than stocks, which may face challenges in a slowing economy,”* noted the analyst.

In his view, Wall Street has reacted to this outlook. On April 30, the day of the report on the PCE index, Bitcoin ETFs experienced an outflow of $56 million, while net inflows on May 1 amounted to $442.5 million.

Previously, the main driver of inflows into exchange-traded funds was a rotation of capital from traditional assets. However, Fournier believes the current upward price movement is different:

*“Nonetheless, net inflows into ETFs have slowed overall over the past week, indicating a potential conclusion of the distribution phase, with current inflows now being influenced by price dynamics.”*

It’s worth mentioning that analyst and MN Trading founder Michael van de Poppe highlighted the *“growing potential”* for the cryptocurrency market’s growth in the context of declining interest rates and a weak US dollar.