Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesCopyBotsEarn

Even as Inflation Risk Fades, Bitcoin Remains Stuck Below $31K

CoindeskCoindesk2023/07/12 18:59
By:Stephen Alpher

Wednesday's CPI report showed sizable decelerations in both overall and core U.S. inflation, which one might've thought would drive BTC's price higher.

(JESHOOTS.COM/Unspalsh)

Bitcoin () investors received what should have been welcome economic news Wednesday as the government reported a big slowdown in U.S. inflation.

And, indeed, bitcoin's price quickly shot up to almost $31,000 following the report. It didn't last long. As of press time, BTC had pulled back below $30,500, down more than 1% from where it was before the Consumer Price Index (CPI) data was released.

The report showed consumer prices increased 3% year-over-year in June, versus the 4% gain in May. Even better, the core rate – which excludes food and energy prices – slowed to a 4.8% increase after stubbornly holding above 5% earlier in 2023.

To the extent that speedy inflation has been among the headwinds sending bitcoin tumbling from its peak near $70,000 in November 2021, fading inflation risks would seemingly be supportive. That this didn't happen today brings forth a few issues.

First, perhaps it's another in what's been a number of inflation head fakes in the Covid era. Remember 2021's "transitory" phase in which the U.S. Federal Reserve was convinced it didn't need to act on rising inflation due to its expectation that it was a temporary blip? Commenting on this morning's CPI, The Wall Street Journal's Nick Timiraos was in July and August 2021, which seemed to confirm that hypothesis before subsequent data said otherwise. Timiraos doesn't expect the Fed to be swayed from its path of additional rate hikes in 2023 by just this morning's data.

Second, there was more news today than just the CPI print. showed two wallets labeled as belonging to the U.S. government and linked to seized bitcoin holdings from the Silk Road marketplace moved 9,825 bitcoin ($301 million) in three transactions. That sort of selling pressure may have more than balanced out any good inflation news.

Finally, markets anticipate. The price of bitcoin has risen more than 20% since mid-June. While the catalyst for that is commonly thought to be the (and subsequent filings by a number of other asset managers, including ), perhaps some of the bullish action was due to markets sniffing out the improved June inflation report. As Timiraos , observers had been talking about sizable softening in some of the CPI components for some time.

Maybe doubly frustrating the bitcoin bulls today is that traditional markets appear to have fully embraced the weaker inflation report. The dollar index is off more than 1%, which is exactly what one might expect if inflation concerns and subsequently the chances of future Fed rate hikes were receding. The 10-year Treasury yield is off a full 13 basis points (0.13%) to 3.84% and the two-year yield is down the same amount to 4.74%. And while bitcoin resides in the red on Wednesday, both the Nasdaq and SP 500 are ahead by about 1% and hitting new all-time highs.

Edited by Nick Baker.

166

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Stake to earn
CEC, QTLX, GDV and other popular new coins are in hot progress!
Stake now!

You may also like

What will the Fed’s rate cut mean for the global economy?

Share link:In this post: The Fed is set to cut interest rates for the first time since COVID, which will shake global markets, currencies, and commodities. A stronger dollar has crushed weaker currencies like the Japanese yen and Turkish lira, while central banks scramble to control inflation. Ray Dalio warns that the Fed’s decision could worsen the US debt problem and spark more political chaos ahead of the election.

Cryptopolitan2024/09/17 16:00

VIPBitget VIP Weekly Research Insights

Liquid staking emerged after Ethereum transitioned from a proof-of-work to a proof-of-stake mechanism. Its primary goal is to enhance asset utility by allowing users to earn staking rewards while maintaining the liquidity of their staked positions. Currently, mainstream liquid staking protocols allow users to stake their assets in exchange for liquid staking tokens (LSTs). For instance, by staking ETH on platforms such as Lido, users receive stETH tokens. This approach is commonly referred to as "liquid staking derivatives" (LSDs). Since Binance hinted at collaborating with Sanctum to launch the Solana liquid staking token BNSOL, Sanctum's governance token CLOUD has gained significant attention, rising despite unfavorable market trends. On September 5, Bybit announced its partnership with Solayer to launch bbSOL. Additionally, major exchanges have unveiled plans to introduce Solana LST tokens. EigenLayer also began its second season of airdrop claims this week, with its governance token EIGEN potentially circulating by the end of September. The LSD and restaking sectors are gaining quiet momentum, potentially setting the stage for a new wave of hype around restaking within the SOL ecosystem.

Bitget2024/09/13 06:30