The Consumer Price Index (CPI) data for January was released on Thursday and against the 7.3% annual growth that was being expected, the figures published show consumer prices surged 7.5% YoY.
The direction in the price of Bitcoin (BTC), and infact, the broader market seems to be deviating from the earlier bullish pathway that notably sent volatility and frenzy amongst investors. At the time of writing, Bitcoin is trading at $43,961.13, down 1.41% in the past 24 hours according to data from CoinMarketCap.
The slump seen was unprecedented, seeing that BTC grew to a 24 hour high of $45,661.17 earlier on Thursday, riding on the massive sentiment boost that swept the markets earlier in the day.
That Bitcoin is a very volatile asset is not the question, however, the surreal optimism amongst analysts has further lent credence to the notion that Bitcoin’s market behavior is not a respecter of an individual’s opinion, rather, it is of the broader confluence of reactions in the market per time. Ideally, Bitcoin as well as the broader crypto market has been on the downtrend since the beginning of the year, and the sparky growth seen a few days ago suggested a renewed growth path to beat the $48,000 resistance level.
Data from CoinShares confirmed the continuous accumulation of BTC by institutional investors, and this demand was reportedly instrumental to the revival in the price of the premier coin from $35,000 to $45,000 within a week.
“The benchmark cryptocurrency continues to be in demand after strengthening above the 50-day moving average,” FxPro analyst Alex Kuptsikevich wrote in an email to CoinDesk. “This confirms the breaking of the downtrend of the previous three months. For the third week in a row, institutional participants have been investing in crypto funds, according to CoinShares. On the intraday chart, you can see purchases at the close of the American session, which clearly demonstrate the interest of the institutionalists in this region.”
Bitcoin Volatility and the Inflation Disadvantage
The Consumer Price Index (CPI) data for January was released on Thursday and against the 7.3% annual growth that was being expected, the figures published show consumer prices surged 7.5% YoY.
The fact that inflation is getting worse is supposed to be a resounding advantage for market bulls to HODL their Bitcoin position, however, the opposite is exactly what is happening. The ongoing reversal in the price of BTC has showcased there are some investors or Bitcoin owners that believe the US Federal Reserve or other drivers of the economy will be able to keep to their words of correcting in soaring inflation thus making risky assets a gamble.
Bitcoin and other digital currencies have held the tag as a viable hedge against inflation for well over a decade. Even though only a few market whales like Michael Saylor, the Chief Executive Officer of MicroStrategy Incorporated (NASDAQ: MSTR) are vocal about his company’s purchase of Bitcoin, the digital currency still maintains its high and impressive rate of growth when compared to traditional investment assets.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
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