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The price of bitcoin fell to around $ 27,000 per bitcoin, its lowest price since late 2020 as ethereum plummeted to less than $ 1,500 per ether. Smaller cryptocurrencies are faring even worse, with BNB
The latest sell-off of bitcoin and cryptocurrencies was triggered by fears that the Federal Reserve could put its foot on gas in its fight to reduce inflation after the latest reading of the US Consumer Price Index showed that the economy remains hot.
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“Now the Federal Reserve is in the corner,” cryptocurrency investor and influencer Anthony Pompliano wrote in his newsletter after the latest inflation data was released.
On Friday, data showed that prices in the US rose faster than expected in May, climbing 8.6% after falling in April, fueled by rising energy and food costs and pushing inflation to the rate. highest since 1981.
“Inflation hasn’t declined even though the Fed has raised interest rates and conducted a quantitative tightening. They don’t have many options other than just putting their foot on gas. The Fed may try to accelerate interest rate hikes,” both in terms of speed and severity, as well as accelerating quantitative strengthening. I’m not sure they will, but there aren’t many other avenues to pursue. “
Next week, the Fed is expected to raise the interest rate to 1.25% -1.50%, following a similar move last month. A Reuters the survey found economists forecast a further 50 basis point rate hike in July.
“[Friday’s] The inflation report is the latest major release ahead of the Fed meeting next Wednesday, “FxPro senior market analyst Alex Kuptsikevich wrote in an e-mailed note.” A renewal of inflation to highs from 40 years is sure to grab public attention over the weekend and put pressure on the Fed. Potentially, such a high reading could trigger a tougher [Fed] position in the accompanying comment “.
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The market for bitcoin, ethereum and cryptocurrencies has steadily declined over the past six months, collapsing along with the stock market as the Federal Reserve and other central banks around the world raise interest rates and begin to cut back on the era of stimulus measures. pandemic. The Fed this month began the long process of shrinking its swollen $ 9 trillion balance sheet, known as quantitative tightening.
“Bitcoin’s continued correlation with stock markets agitated by macro forces has stifled optimism and sparked frustration at a time when cryptocurrency seems to miss the perfect opportunity to demonstrate its forgotten role as an inflation hedge,” Rich Blake, financial advisor to the crypto platform Support, wrote in the comments sent by email.
“As monetary tightening around the world accelerates, equities are still vulnerable to lower lows in the short term, seeing telltale signs of a cyclical bear market.”