The U.S. economy faces the challenge of "stagflation", Hong Kong launches Bitcoin ETF

The United States is currently facing a situation of rising inflation but slowing economic growth, raising market concerns about "stagflation." The GDP growth in the first quarter was only 1.6% year-on-year, far below expectations, while the core PCE price index exceeded expectations with a growth of 3.7%. This economic situation stands in stark contrast to the "high growth, low inflation" scenario at the beginning of the year, forcing decision-makers to reconsider how to address the inflation issue.

Nevertheless, the overall stance of Federal Reserve officials remains dovish, and they have not clearly indicated that further rate hikes will occur. The market generally expects that there will be no rate cuts in May, but the likelihood of continuing rate hikes is also low. In the future, rate cuts may be delayed, and the number and magnitude of cuts may be reduced. It is expected that, with factors such as stabilizing commodity prices and a rebalancing labor market, core inflation in the United States is likely to gradually decrease.

This month, global financial markets experienced fluctuations, with significant pullbacks in US and Japanese stocks. The Nasdaq index once touched the 120-day moving average, and tech stocks such as Nvidia saw substantial declines. This mainly reflects changes in interest rate cut expectations, while geopolitical conflicts are a secondary factor. However, major European stock indices performed relatively steadily, and the Indian stock market also maintained a high level of volatility, indicating that there is no systemic financial risk globally.

The cryptocurrency market has also undergone adjustments, with the price of Bitcoin briefly falling below $60,000. It is worth noting that the price of Bitcoin has shown a high correlation with Nvidia's stock price recently, a phenomenon that is thought-provoking. Theoretically, as "digital gold," Bitcoin should exhibit safe-haven properties during geopolitical conflicts, but the actual trend contradicts this, possibly reflecting the impact of the US ETF on its pricing.

However, the cryptocurrency market is also welcoming significant positive news. On April 29, Hong Kong officially approved 6 virtual asset spot ETFs, including 3 Bitcoin ETFs and 3 Ethereum ETFs. This not only provides investors with diversified options but also has the potential to bring about $1 billion in incremental funds to the market. Additionally, Australia plans to launch a Bitcoin ETF by the end of the year.

The launch of this multi-region ETF helps to diversify the pricing power of Bitcoin and maintain its decentralized attributes. As more and more countries or regions launch related products, the pricing mechanism of Bitcoin may become more diversified, gradually returning to its essence as electronic gold.

Despite the increased volatility in the short term, the global cryptocurrency market is developing towards a more mature and regulated direction in the long run. Financial centers in Asia, such as Hong Kong, are playing an increasingly important role in this process, opening up new investment channels for global investors and contributing to the decentralization of Bitcoin pricing power.