Bitcoin Forum

Bitcoin and the crypto market went down today after reports came out that the US inflation rate hit 40-year high in May

US Inflation Quickens to 40-Year High (https://www.bloomberg.com/news/articles/2022-06-10/us-inflation-unexpectedly-accelerates-to-40-year-high-of-8-6)



Thoughts?

bitcoins price is not the lowest its been in the last 14 days. so id say.. calm down..
and also zoom out of the hourly/minute charts..

no one can judge overall market sentiment of reactions to long term inflation results as being the cause of temporary minute/hourly price changes..

so dont be checking the per minute/hourly level charts trying to assign reason for all small movements and dont get emotional/concerned with the per minute/hourly movement

instead
look at the the quarterly charts and assign a bottom amount it ever reached. and then if it reaches the quarterly bottom again.. . then try to find reason.

This probably didn't have much of an effect on bitcoin's price and is just two things happening at once.

I think US monetary policy has been speculated to be maintaining an inflation of about 8% so this could be that just catching up. Surely inflation dollars being reported as high would be a good thing for crypto too as there's extra cash moving through the economy.

Technically btc should go up with news linked to inflations in fiat markets because logically Bitcoin's point becomes stronger with every bit of depriciation in dollar. I think this was just a market reaction to the news immediately overall this will should give green signs in bitcoin as this is an absolutely positive news. If anyone has another point how these can be connected please do tell.

Inflation and the U.S.A baby boomers beginning retirement is causing a run from all speculative investments into more stable investments,
such as cash, bonds, gold & silver.

This is a natural progression of the aging demographics when people that retire switch from speculation to more investments that are less likely to lose against inflation. For others, due to the inflation, they need the fiat to survive causing the sell offs.
Since crypto & stocks are sold to buy food & energy , expect the sell off to get much worse for the foreseeable future.

* Some would say crypto can be used instead of cash, while true, Merchants and Utilities would immediately sell for fiat , as they can't afford holding crypto that can drop large % in a single day, which still creates a sell off.  One upcoming concern for btc holders is how long Tesla car company will hold their btc, as their sell off would definitely impact the BTC market price. *

    

Few weeks ago, I commented on a similar post to this, which was speculating the reason behind Bitcoin dropping about 2 or 5% within a short time.

It seems like most of these 'media houses' simply Google recent events whenever Bitcoin price drops and writes an article on how that is what stimulated the price action. This is mostly inaccurate as it's just a regular day in Bitcoin market cycle.
Zooming our of the charts a bit more, this drop would be quite insignificant.

This thread is a better fit in speculation board as that discussed trading action and price movements, but it's not really a general topic for Bitcoin discussion.

Bitcoin is still coupled with traditional investments and acting like a speculative investment instead of the safe haven it is billed to be.  I hope at some point as the stock market & housing market implode, Bitcoin will separate itself and move opposite everything else.  It's important to remember that while Bitcoin has had an incredible run, it has never faced a recession.  There is a good chance that the value drops significantly along with everything else, but I'm hoping that isn't the case.  Would love to see Bitcoin hit $200K while the stock market suffers a 30% loss from here, but so far all signs point to it being a victim of it's investors and the overall market as a whole. 

Unfortunately the time span you use is too short. Compare inflation rates over the years with charts that are minutes or hours long. Obviously not a balanced benchmark. Perhaps you mean the short-term impact after the announcement made Bitcoin drop below $30K. This decline could be only temporary due to the panic of the US public to temporarily withdraw their finances in the Exchange.

Expected. We tend to think of crypto as a decentralised network and therefore completly autonomus from outside factors, but that's just not the case. When there is a looming threat of economic collapse like there is now, people tend to buckle down and not invest. And like it or not, crypto, for the most part, is still considered and investment.

I don’t think this is the bottom, we are only mid way through 2022. The halving is still 2 years away. If we are to follow the path from previous cycles there is still a capitulation event to come, we haven’t seen it yet.

Just prepare & be ready to buy under $25,000.

First of all, we are in unprecedented times with inflation. Bitcoin has not existed long enough to have coexisted in a market with 40 year high inflations. You need to give it more time for the analyists to draw conclusions. There isn't enough data. Secondly, the global economy isn't doing well, and plenty of institutional investors are not involved in crypto assets due to fears of recession. Investors are putting their money into tangible investments (precious metals, housing, etc.) That's going to drive the price down, obviously.

Don't panic.

Inevitably, inflation is going to skyrocket in US and in Europe due to the economical policies adopted by FED and ECB, but for now it's still profitable for big investors to participate these traditional markets, because interest rates are going to increase, what can be really profitable on short run, just like ponzi schemes are for early investors. However,once inflation hits hard and in high intensity, those investors will cashout their profits and come back to crypto market in order to protect their funds by investing on the most reputable cryptocurrencies (mainly bitcoin and ethereum) while speculating part of their funds, as usual, in altcoins. That is the next bull run I'm waiting for.

That is my read of the scenario and that is why I think bitcoin is still dropping with such news. Investors are fleeing for now, but they are going to come back soon.

I also think the same that with this inflation news, the US dollar should go down and the bitcoin which is non-inflationary.
 
Bitcoin reacts too quick to the news and that's not good for bitcoin. Why does everyone dumps their bitcoin on such news  ??? Believe me, bitcoin will remain bearish for next two days and will pump again on Monday.

Remember that correlation doesn't equal correlation, and quite frankly when you're looking at data like this, with such a small time frame it's almost impossible to take anything conclusive from it, even ignoring the above phrase.

I don't think it will have much a short or long term impact on the price of Bitcoin. At the end of the day Bitcoin is its own currency, and doesn't depend on USD. However, the higher inflation rates rise, the more people who will be looking for alternatives, and Bitcoin will be at the top of the list.

Anything can happen in crypto but i am still optimistic that we may not hit 25,000$ because we haven't hit the expected highs in this bull run.
Secondly, there is no need to panic yet and bitcoin has been moving inside a range where the bottom is near 29,000$ and the top is 32000$. If bitcoin closes a day below 28,000$, then it may be a moment of concern for the bulls.

Bitcoin was originally created to negate the inflation on fiat currencies, so a news about high inflation rate on the USD should naturally affect the price of bitcoin positively. Therefore, if your chart says bitcoin moved downward when the report was released it can only means that it has no effect whatsoever on Bitcoin.

It seems the media always find a way to link any economic report to bitcoin even when the charts clearly say otherwise.

IMHO, this had happened before. If it goes under $25k-$20k then that would create a panic for buying. Too many events in the global markets that have been pushing the other markets down too. It's likely that most the people are putting hard money on cash just for anything to be prepared for and after when the dust settles and there's a clue or hint that these crises are about to end, we'll see more money flowing again in bitcoin. Needless to say, even it's not doing good for bitcoin right now, it's normal to see it fluctuate this much and after this, we'll see it skyrocket.

Expect bitcoin to go up within the next few days, the CME gap that ought to be filled has been filled, likewise btc longs is getting more pump on bitfinex, such longs mostly indicates the bottom its been accurate for the past few years, so all in all we might see 34k within the next few days, I'm expecting a very high volatility of the market, longs is gonna be liquidated likewise short will also be liquidated, lots of manipulation incoming

This is the issue I have with fundamental analysis:

Bitcoin is not a stable coin, it is subjected to continues movement in either ways of the market. But the media influencers and so acclaimed analysts always tie bitcoin movements to any concurrent economic news. Even when what happened was an obvious coincidence, one news or the other must take credit for the bitcoin action.

The chart you displayed in zoomed in and on hourly bases, and that should not be used as a major indicator that it is tied to US inflation rate.

Very soon bitcoin will grow pass this economic and political speculations.

The reason for the current dump in the price of the Bitcoin market can be caused by many reasons which are the market's current momentum are still bearish, and for some weeks now the BTC market has always gone dips during the weekend. Therefore, the report of the US inflation rate hitting a 40year high is not the reason behind the downtrend of the Bitcoin market and if history repeats itself in the BTC market I believe we haven't seen the bottom price.

Inflation haven't left any countries, every country has been experiencing this. United States experiencing the worst inflation in its 40 years of history needs to be rectified. If I'm not wrong, during the last two years there is stagnation in growth all around, in particular very few corporate networks that provide online services reached big milestones. This stagnation out of the pandemic is getting reflected now on the market of fiat and cryptocurrency. For now even if price drops down to $25k isn't a surprise.

What dump? The price is staying in the same channel.

May 15 28500
May 18 28600
May 20 28400
May24 28500
May 26 27900
Jun 1 29290
Jun 7 28900

These were all "dumps" and as you can see they are happening every few days.

I don't see any connection with inflation. High inflation should actually pump bitcoin because your fiat money is losing value so it's much better to buy something while you can.

^Definitely right and I agree with this.
There is no connection with the inflation of the country and I think not the only US has been experiencing this inflation, all countries must be there is inflation. I don't think why those social media authors will always compare the economic event compare to BTC price which I think they are completely irrelevant. BTC will grow on its own.

The inflation rate report doesn't have anything to do with bitcoins' price because we are still in the same range from its price few weeks ago. I strongly believe that we already hit the bottom and is now in an accumulation stage. Many are prepared to buy in $20-25k range so even if we go that deep, I don't think it will last for a long time. If there is really a threat on the bitcoin market, some whales or institution could have sold their holdings that will really impact the market.

This is not always like that mate, theoretically, it is supposed to be going up but Bitcoin is an investment to many people and due to inflation and the rise in the price of everything, it affects short-term traders, when they all withdraw their money to have some cash, the market tumble and then panic follow, that's the case of bitcoin and other stock markets. The CPI seen has never happened before, so we will see these little market shakes and waves before it goes up.

But bitcoin drops below 30k even before this inflation rate reports? so what is the question on that when it is proven that there are many issues that let this dumping happen and not just that inflation of US.
I believe that this inflation does not really represent the bearishness of market or even this recent fall , instead this is a continues effect of what is happening in the whole world economy and also with wars on going still now.

That's an interesting way of viewing the current situation. Yup, I can clearly see how the USD price is going up, and it's particularly beneficial for freelancers paid in USD like me, so I keep track. And because I'm getting more than what I was expecting from projects I accepted weeks ago, I am planning to use the excess to buy crypto. I bet other people like me have the same idea too. So this makes sense.

May go down a lot more from here because to kill the inflation, the FED will probably have to raise the interest rates much harder than they did till now. Stocks are going down too. Surprisingly gold is holding OK. Not only holding OK but it went up by like 1.7% yesterday. That was pretty interesting imo. The analysts I follow say that we might see low $20k's in a few months. If that happens the real panic will start because bitcoin never went below the ATH's of the older bull runs before.

Negative sentiments around bitcoin can't stop themselves from hitting it again and again huh.
Seems like more negativity is spread in the market but the inflation has not only impacted bitcoin but also all other assets in the market.
The stocks are falling too. It's gonna be a long time this time before see the new ATH.

People need to relax because what happen in US for sure doesn't do anything on what happen on crypto and $30k is not newly reached since we already entering on that zone even last month, So people need to relax and stop relating on things which we see not doing any harm to BTC. Also If you just hear this thoughts to other people who think about the inflation is the reason why bitcoin dump today better not to believe since they are using this to change the phase of the people and then create negative sentiments to people who can read their article.

Yes, inflation is still affecting many countries because of the pandemic that reduced world economy some years ago. I think many governments are trying their possible best to make money available to fight the inflation in their land before the end of December because many citizens find it difficult to feed their families in the country. I believe the price of bitcoin is not dropping because of other countries inflation, it dropped down to $27,000 to allow people to buy and hold for the price to move to $60,000 before the end of July before they can sell to make a good profit.

Yeah, and with Eurozone also set to hike interest rates, it's really hard to find hope for a rally beyond the 31/32k range we've been touching ever so slightly. It's definitely in keeping with the wider macro economy/stock correlation too, so anyone who thinks Bitcoin's burst free should take note, or hope BTC does something special and keep guys like me open-mouthed.

Silver lining: accumulation can continue for a bit!

What happens is that the average person does not really have too much knowledge about how the markets work, so whenever they see a big news they suppose the price of bitcoin should immediately move to reflect that news on its price.

But the markets are not that simple, even if a news were to eventually be priced by the market this is not an instantaneous process and it is something which could take months or even years, so the high level of inflation all around the world may have an effect on the price of bitcoin on the future, but with the bearish conditions we are experimenting it is impossible for this to happen so soon.

It's crazy there's been virtually no safe haven for invested assets outside of maybe real estate? And if you were holding fiat you are getting obliterated by inflation.

Technically speaking, this should point to a good situation for Bitcoin/crypto but alas, here we are.

That said, a lot of the asset prices, Bitcoin included, were semi fake from all the money printing that is getting dialed back now.

Negative news = negative effect or no effect at all with Bitcoin.
The good thing though is that the negative news that we are seeing right now only have a short term effect towards Bitcoin price.

Instead on focusing on the short term, maybe let's just focus on the long term. Inflation in the US has been high already since the start of the year. Right now, there are no good news happening, so maybe just expect for the worst to happen.

Well but before the inflation news I've personally observed from coindesk chart that for the past 1 week BTC has been oscillating between 27k and 32k so I think that pattern will remain this week irrespective of the news....

To be honest, this isn’t affecting a lot to the market.
I mean we have already seen Bitcoins down from what the current price is.
Yes we can say that it has hampered the growth a bit. As we have seen Bitcoins hitting 32k usd and suddenly within few hours it dropped to 29k usd.
Nevertheless I would suggest to wait and hold in this bear market.
Soon the market will recover and you will see the profits.
If possible don’t sell your Bitcoins now in such a lower price. Just hold the coins for more few weeks.

At this point is pretty clear that this is going to be a difficult year, we just need to hope that we're close to the bottom even though I wouldn't be surprised if bitcoin would go down to $20k, approx the old ATH. In that case I don't even want to think where the altcoins would go...

US dollar is a big market factor and any major fluctuation in US currency shows corresponding responses in market, but we should not ignore the fact that markets are actually coming out of grip of dollar, already several countries like russia, iran and china are exploring the alternatives to dollar as payment avenue, and though there is a fall in bitcoin value due to US inflation. I long run this won't remain the case and we will see bitcoin go strong as it is a contender to fill the vacuum created by dollar devaluations

I think that while 8.6% is bad for a strong economy like the US, it's not a reason to panic. Also, the last few years have been particularly bad, so it's not surprising that there's an inflation issue. Finally, I don't think there's any link between the news of USD inflation prognosis and Bitcoin price getting down. Not to mention that the fluctuation of the price is very small, not big enough to even look for a cause behind it.
If anything, I think that dollar losing value can motivate people to look at Bitcoin because inflation is not something that can happen to it.

Once the again the price dropped down for a few and people are worried about the price of bitcoin because they do not have a log term vision, in the first place we should look deeper and understand the price is not still even near the danger and it was at this level during the last two weeks so that's not surprising and we shouldn't be worried about it, regardless of that even if the price goes to the lower levels and pass the key support area with a sharp price movement still the long term holders will stay safe because they actually don't care about the price in short term. with a proper plan and risk management plan they will stay safe even when the price falls down to lower prices and that's what we have to do in this situation.

Anyhow, we can really expect that kind of price fluctuation even without such a US inflation report. We are in the bear mode market, perhaps the price is moving to that range of $28k - $31k. This is not a big surprise, not even a big news to cause panic but yes, we can't just ignore their contribution to the market trend as this country also has the influence.

Well, something we need to keep our trust stronger and keep our minds positive. We can just surpass this situation just like before.

I remember early 2021 when we made $ 39k for the first time and we thought we had reached the sky, but as we all know Bitcoin didn't stop there. Now it has been almost six months that we have been in negative territory and that is mostly because of the war, the Russia sanctions, the oil price, and the decline in the global economy. Of course, there are other factors but as we already know, correlation is the mother of all relationship.

You are correct, however, you must also factor in interest rates. As interest rates go up, the value of a dollar in the future becomes less valuable. This is important because if a speculator believes the price of an asset (such as bitcoin) will go up by 10% in one year, this return will become less attractive when interest rates increase.

I believe the reason why some are selling has to do with the fact that expected future returns on speculative assets now look less attractive with interest rates rising.

The price decline has more to do with the anticipated future higher interest rates that will be necessary to deal with inflation, than inflation itself.

US being a major country with increased cryptocurrency usage, anything happening in USA will have direct impact over the market of bitcoin. That's the reason why the price drop is connected with the rising inflation of USA. The bear trend keeps the price within specific range. This can drop even lower. Today it has marked low price reaching near to $28k.

I think so too and I believe what happened to price around the time of the news is nothing but market correction. Come to think of it, Bitcoin has remained below $30k for few days now before the news. So, it's nothing much apart from the OP zooming in on the graph on the hourly TF and that made it seemingly alarming.

No, I don't think it was. If anything, Bitcoin is taken as a safe haven for the troubled dollar. I think it was a mere coincidence that Bitcoin price dropped at that time. That's not even a severe drop compared to what we've seen in the past week. A check shows that Bitcoin did $26,700 a few days ago while it's still trading around $27,500 at the moment.