Fears of an acceleration of US interest rate swings due to surprisingly high inflation continue to weigh on Bitcoin and other digital currencies. A bitcoin cost more than three percent less on Sunday afternoon than the day before on the Bitstamp trading platform at $27,464. Since US inflation data came out on Friday, the oldest and largest cryptocurrency has already lost more than nine percent.
Thus, the price continues to drop to its lowest level since late 2020, which stood around $25,400 in mid-May. Other crypto assets such as market number two, Etherum, have also remained under pressure in recent days.
US inflation hits 40-year high
In the US, already high inflation surprisingly rose further in May to its highest level in more than 40 years, with consumer prices rising 8.6 percent from the same month last year. This dealt a further blow to the mood in the financial markets, which had already been weakened by concerns about the economy. On the stock market, the leading German index Dax collapsed by more than three percent on Friday and Wall Street also fell sharply.
Consumer confidence is likely to decline rapidly
Investors fear that high inflation in many regions of the world will soon dampen people’s spending mood as they simply have to spend more on groceries, electricity and rent. In addition, a tough stance by the US Federal Reserve to curb inflation could become an additional drag as high interest rates are likely to make businesses and consumers more reluctant to invest and spend on leverage.
However, bond market yields continue to rise. For example, on Friday, 10-year US Treasury yields hit their highest level since late 2018. Rising interest rates, in turn, often drag the prices of risky assets, such as digital currencies, down.
Bitcoin now 60 percent below record high
Until November 2021, digital currencies continued to grow despite already high inflation. At the time, some market observers saw Bitcoin & Co as protection against a devaluation of classic currencies such as the dollar, despite the extremely strong swings. The picture has now completely changed. Since hitting a record high of $69,000 in November, bitcoin has plummeted by a good 60 percent.
According to Coinmarketcap, it now only has a market value of $524 billion, followed by Etherum at $178 billion.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
