Prices keep rising but bitcoin still isn’t behaving like the inflation hedge it is said to be | Currency News | Financial and Business News
- Inflation worries were fueled on Tuesday as the CPI posted its largest one-month rise in 13 years.
- However, Bitcoin, widely viewed as an inflation hedge, is down after the CPI measurement.
- However, some bitcoin bulls claim that the cryptocurrency will prove its use as a hedge against soaring prices.
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Inflation worries were fueled on Tuesday when Consumer prices Between May and June it saw the largest increase in a month in 13 years, but Bitcoin, often touted as a hedge against a weaker dollar, didn’t respond in the same way.
US stocks submerged outdoors while Bitcoin was flat and then fell steadily through the morning and early afternoon. The price of the world’s largest cryptocurrency by market cap was about 2% lower than $ 33,000 for most of the day after the CPI numbers were announced.
The asset traded at $ 32,854 at 1:10 p.m. ET on Tuesday.
This has also happened in previous readings. In May, Bitcoin fell 7% on a day when CPI data showed the fastest price increase since 2008. In theory, higher inflation would increase the demand for assets that can serve as an alternative store of value to cash – including Bitcoin.
“Bitcoin is no longer acting like an inflation hedge and will continue to exceed expectations for higher returns,” said Ed Moya, senior equity analyst at foreign exchange company Oanda, in a statement on Tuesday.
That inflation is viewed as temporary, however, could be a reason the June report wasn’t enough of a catalyst to break Bitcoin’s sideways trading, Moya added.
Bitcoin has long been known as a. announced hedge against inflation mainly due to its limited supply of 21 million coins. The idea is that Bitcoin serves a similar purpose to gold to protect against ruthless fiscal policies that devalue fiat currencies.
Billionaire investor Mike Novogratz once said Bitcoin’s value has risen as governments print money like “toilet paper”.
However, some bitcoin bulls claim that one day the cryptocurrency will still prove its purpose.
“Bitcoin is still a long-term hedge against inflation for most investors,” John Wu, president of Ava Labs, the team behind the altcoin avalanche, told Insider.
He continued, “However, given the number of new investors in this space, there are investors who consider it a risk investment and these additional investors could sell as a source of capital in the short term.”
Bitcoin’s price has been a broader one Cryptocurrency crash in May.
But it appears that the more the digital asset is tested the more it is being tested, holding on to its $ 30,000 support level, Julius de Kempenaer, senior technical analyst at technical analysis platform StockCharts.com, told Insider.
“As a result, any break below that level becomes more and more meaningful,” he said. “If that happens, expect $ 20,000 as the next level of support.”