Bitcoin (BTC), traders expected to rise in February US inflation data Although he had taken a cautious and conservative stance before, he had not experienced a rise. However, this rally did not last long and ended today, losing 5% to $39,600.
According to a report shared by Reuters, US consumer prices are expected to rise 7.9% last month, the fastest increase in nearly four decades. In recent months, due to the increasing inflation trend, its tendency to act as a risk-oriented asset. Bitcoin (BTC) created a negative situation for For example, in response to the January inflation reading, which showed the BTC price up 7.5%, there was a drop of about 5%.
Considering that the price of Bitcoin took the lead in the crypto money market, this decline was followed by many altcoins. While there was an average of 1.5% to 5% depreciation, including the best altcoins such as Ethereum, Ripple, Cardano, the crypto money market has lost $ 80 billion in value from yesterday to today.
Despite the recent data showing that Bitcoin’s correlation with the stock market is decreasing, today’s drop showed that this divergence is still not enough. BTC has also depreciated significantly compared to gold prices this year, prompting many to question its viability as an inflation hedge.
BTC is down nearly 40% this year, while gold is up 10%. Still, the US government sent a positive signal to the crypto market on Wednesday in anticipation of crypto-friendly regulation.
The latest sanctions against Russia over its invasion of Ukraine are likely to boost inflation this year, but today’s 8:30am ET reading is unlikely to reflect the impact. But while sanctions on Russian oil will increase energy prices, cuts in Ukraine’s wheat exports will cause food prices to rise, both of which are known as one of the main factors of inflation.
Rising food and energy prices will affect the ability of retail traders to invest in cryptocurrencies, thus impacting BTC’s prospects for the year. There is also speculation that rising costs could lead to a recession this year, an extremely unfavorable environment for risk-based assets.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.