Bitcoin (CRYPTO: BTC) rallied almost 10% yesterday after reaching $20,100, as the Federal Reserve announcement of a 75 bp rate hike resulted in a short squeeze. Although a 50 bp hike was anticipated for many weeks, last Friday’s inflation data forced the market to price in a more aggressive hike with huge sell pressure. Therefore, a 75 bp hike was priced in for the short-term leading to a rally. The market has since cooled off slightly and there could be more downside ahead over the next few months.
This is due to concerns around an earnings recession on the horizon, as a result of the Federal Reserve’s aggressive monetary policy. According to Bank of America, stagflation fears are the highest since 2008, and profit outlooks are the worst since the GFC (Global Financial Crisis) too. Global Profit expectations are expected to fall 72%, which is the weakest guide since the GFC. If this comes into fruition, it could result in an uptick in foreclosures and bankruptcies. One example of this occurring already is Revlon, an American multinational cosmetics company, who have filed for bankruptcy due to not being able to cover their debt obligations.
