Often in a sea of disparate and contradictory information, it is difficult to navigate to form a single coherent picture of the crypto world. Analysts at Iconic Funds have tried to give a general view of the economic situation with Bitcoin. Here is a brief overview and some talking points from that report.
A new and quite original study from Iconic Funds has become available, where experts try to give the most general view of the current situation in the crypto market. The study examines the US macroeconomics, the state of mining, on-chain metrics and all other factors that combine to affect the final price of Bitcoin. Based on this qualitative overview, an attempt is also made to answer the question of what are digital assets, and what is their nature.
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The report is primarily of interest to economists and investors, as it carefully examines the market mechanics in all areas of the Bitcoin ecosystem. As a maximum generalization, it can be stated that the price of Bitcoin is mainly determined by the Fed’s key rate. The market is now in a prolonged rate hike, which has created a crypto winter. The next important stop for the market, which will cause Bitcoin’s rapid rally, is the so-called Fed’s pivot, the scenario discussed in the study.
By the way, judging by current news, we are very close to this pivot point (although many expect this event in 2023):
The paper is titled “Cryptoassets and the Macroeconomy: Can macro factors explain the price of Bitcoin?” and is available in both the traditional pdf file and a sliced version of the serial abstracts in this thread.
We recommend reading all of the study’s abstracts strictly sequentially, so it will gradually unfold a logical and consistent picture of what is going on. For illustrative purposes, we have selected some statements around this important Pivot Point, which lists all the factors that can cause a bullish reversal in the crypto market.
What the ultimate catalyst for a Fed pivot might be, is not foreseeable at this point. However, we think it will most likely be one of the following:
However, the risk that tight monetary policy world-wide might induce an “accident” is increasing. The UK fiscal fiasco speaks volumes in this regard.
Fed pivot will likely be induced by an accident or external (geopolitical) event rather than a significant decline in US inflation or spike in US unemployment in the short term.
The report very carefully analyzes the confusing situation of the global economic and energy crisis, as well as possible unforeseen shocks from the ongoing war in Ukraine.
On this basis, the study provides thoroughly grounded predictions for Bitcoin, based not on single factors and trends (as is often done in the news), but on a comprehensive consideration of the entire set of factors. We believe this study is a very worthy attempt to create a predictive model that describes all of the factors surrounding Bitcoin economics.
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