The cryptocurrency market is catching its breath after a several-month decline in price. Bitcoin, the leading asset of this class, reached levels as low as $17 500. So far, Bitcoin has sunk by more than 50% in 2022 alone, due to the Terra ecosystem crash, the collapse of crypto hedge fund Three Arrows Capital and consistent fed-rate hikes.
Bitcoin has consolidated in a range between $17 500 and $23 000 during the previous 4 weeks. Similar price action can be observed on other coins as well, because of the high correlation characteristic to this asset class.
The US Bureau of Labor Statistics will release the CPI for June today at 8:30 EST. This publication may be the long-awaited nudge that Bitcoin needs to break free from the current price range.
The direction of Bitcoin’s breakout has been a heated topic of discussion lately. Fear has accumulated throughout investors, with most of them believing that lower prices are headed our way. Inflation figures released later today play a significant role in further price developments.
Higher than forecasted inflation figures generally lead to interest rate hikes, as we have previously experienced throughout the preceding months. With costlier borrowing, the aggregate investment value decreases in an economy-wide spectrum, and even more specifically in speculative assets such as Bitcoin
Conversely, headline inflation below 8.5% could lead to a scenario where the dollar “drops universally” and “crypto goes up 5%+,” says Chris Weston, head of research at Pepperstone Group.