Bitcoin Forum

Global inflation has proven to have a strong effect on Bitcoin these days and the US inflation reports are taking the lead. It has the strongest influence on Bitcoin whether it is a positive or negative report and it explains the recent soar in the price of the crypto. The Federal Bureau of Labor Statistics reported a lower CPI and Core CPI on Wednesday at 0.0% and 0.3% respectively, which made Bitcoin rose and might make it gain strength till the end of August as it has suggested an end or temporary halt to the ever-soaring inflation in the US.


https://i.imgur.com/JZCzSoK.png


Furthermore, the CPI, which is the change in the price of the goods and services purchased in the US and the Core CPI, which is almost the same as CPI, except that the prices of foods and energy are excluded are both good inflation gauges and have been on the bullish path since the beginning of this year. But Wednesday's reports caught investors by surprise and excites the Bitcoin market. The data would have a lasting bullish effect on Bitcoin.


https://i.imgur.com/n7n37mi.png


Keynotes: High inflation reports were the major reason Bitcoin sold this year, so low inflation reports would push it up. I suggest a bullish trend for Bitcoin till the end of August. Also, continue to buy the crypto in September if the report of the Federal Bureau of Labor Statistics is negative for the CPI and Core CPI in the month. I will update the values in September.


Good luck to you!

I disagree with your opinion.
Because the effect of rising inflation on bitcoin should be positive where people buy the only hedge against inflation which is bitcoin. But we saw how when inflation went up a lot of them panic sold their bitcoins.

The reaction was also not to the inflation rate but mostly to other markets (like US stock market) that crashed hard.

There has not been any "soar in price" for the past 2 months. You are confusing sideways market with price soaring.

It's clear you are not a market expert and impatient. What would you call the bullish spike seen from the bottom of yesterday after the news? And did I not mention Wednesday and the recent spike in my post? Please read well before you reply to posts. So you are telling me that Bitcoin is a risk-off market? Then you must be joking. In case you don't know, Bitcoin is a risk-on market and high inflation suppresses it like other risk appetite markets. The soaring of the crypto after lower inflation data of the US yesterday should have proven a common correlation to you. Try to learn.

Price has been going up and trying to reach $25k and break it for the past months, it has been failing and coming down to try again. It is not soaring yet as long as it hasn't broken that resistance. You don't seem to have looked at bitcoin charts in the history and at times like this when a sideways market is in full effect. Which is why you try to find unrelated reasons for a very normal and common market behavior.

We don't have any experts on the market here, are you an expert in the market?
Bitcoin has dropped from $69k and the previous low of 17.6k. With the recent news, the market has had a bit of a good turn with the bitcoin rally. Currently, bitcoin moving sideways around $23k, bitcoin is still losing more than 60% of its value against ATH and you call this a soar? I think you are the one who should try to learn more.

There's no direct connection between the inflation going up and the panic selling on the BTC market.
The BTC panic selling was caused mostly by the Terra/Luna collapse and the big companies like Celsius, Three Arrows Capital, Voyager going bankrupt. All the FUD around the war in Ukraine, global inflation/stagflation and an upcoming recession also had some impact over the Bitcoin panic selling.
OP can't explain the Bitcoin price movements with the US inflation alone. We can't draw conclusions about the future of the BTC market based on a US inflation report. The stagnant crypto market might continue until the end of 2022 and even during the entire 2023.

Meaning inflation did not affect Bitcoin? Many people are just making me laugh on this forum. ;D


No one dabbled into all these epistles you just wrote. In case you don't know, soar/dip and many more are market terms and they could be used for short or long-term market developments, which was exactly what I used "soar" for (Wednesday/early Today's market behaviour). You are naive about the market, so why the unnecessary reply?

Bitcoin is a part of economy and it is affected by what happens to the economy as a whole, inflation is only one many factor.

Also there is a huge difference between inflation having an effect on bitcoin and bitcoin price directly following US inflation rate to the point that the numbers reported change the bullish/bearish state!

No one is disputing this fact, "one tree can't make a forest." All I wrote translates to the fact that inflation is one of the major factors affecting Bitcoin, not the only major factor. You can read that from my first sentence as quoted below. And market tends to respect/adjust to changes in any major factors affecting it.

A strong effect does not translate to a sole effect. Thanks for the contributions anyway, after all, you are so constructive and mature than others.

You're making a causal association without any long term data to back up your claims. Bitcoin has not been tested under an inflation crisis before. Some countries haven't seen their currencies inflate to the degree they're seeing in decades so it's not as if you can use historical trends. You're attributing small, single digit rises, in Bitcoin's price to be associated with inflation, why?

Nice question, yet I implore you to read my post once again. You would realize that I referenced the inflation influence on Bitcoin and also used the latest report of the Federal Bureau of Labor Statistics as a case study and also speculated how the recent decrease in inflation could help Bitcoin rise till September. This might happen especially if the CPI and Core CPI in next month's reports show negative readings too. So, the post contains the long and short-term effects of inflation on Bitcoin.

It has influence over the markets in general; it's not exclusive to bitcoin only. CPI and inflation rates can simply influence the decisions of investors in general; if they want to risk on or risk off. Bitcoin (at least currently) is simply a higher beta version of the Nasdaq.

Casual data, yeah but no!
This is from my other topic, it's a 15 minute graph showing exactly the moment of the CPI announcement:


The moment the numbers were released the price went up instantly, one should really stop thinking thet Bitcoin is in a world of its own where is not influenced by the others, the correlation might go up (https://bitcointalk.org/index.php?topic=5394281.msg59839377#msg59839377) or down (https://bitcointalk.org/index.php?topic=5400908.0), as in those two threads by Ratimov but no matter how much you deny things and numbers are there.


Yes, it does but it amazes me how many refuse to accept this as it somehow breaks whatever sort of image they've had about bitcoin.
Once you start becoming a global tarded asset, with millions of investors and billions flying around, how could you even try to think it will not be influenced by such data just as traditional markets are?

People are good at finding, or thinking they've found, patterns in all sorts of random ways. However a few months worth of selective data does not amount to very much proof of evidence, many examples spanning years would offer a much better hypothesis. It is very clear that bitcoin, and crypto in general, is at least loosely correlated with the ebb and flow of the stock market. Even more so it is related to the current interest rate of the fed, because cheap money allowed a lot more to pour into crypto and riskier assets.

People do not realize that investors are investors and they will do whatever is the best for them and unfortunately they make changes that would be quite difficult for them in the long run by thinking stock investors or forex investors are different from bitcoin investors.

If there is a situation in the world where people are running away from investing into stocks, there is a likely chance that people would be running away from bitcoin as well. Things like recession can't be just hurting stocks, it will impact the whole world and people who are crypto investors will be impacted as well which will result with them deinvesting from crypto and need that cash.

Maybe there is? Because when there is inflation, the prices of the goods are going up and people are in need of money so they will use the money that they have in btc. Terra luna is not the same with btc and if it collapse then people shouldn't worry but about those big companies you mentioned that collapsed, maybe that scares them a little since those companies support several cryptos.

It's true that inflation is not the only basis if the price of the btc will collapse or not but there are other factors as well that is responsible for it. We also have that four year cycle which people based their predictions and says that the market will still be the same for the next couple of years.

You are right, and fortunately, my discussion here is peculiar to Bitcoin, not other markets.

I completely agree with all these, after all, you have made your statement based on the wider market reality, and not jumping to a partial conclusion.

This is about the behaviour of an asset class, don't let us assume or generalize things. How Bitcoin behaves with inflation should be the main goal of this subject. Does inflation affect it? How?

Nothing was quick or selected at random here, I wouldn't have made the post if it does not agree with over a year's findings. Mind you, Bitcoin gained better adoption a few years back, its present behaviour is the true reflection of its asset class, not one of its early year's behaviour. And about 6 months of inflation correlations should have spoken well of this.

Yes actually, CPI Inflation index does have an impact on bitcoin but it's hard to create a solid correlation, because CPI Inflation isn't really that volatile while the price of bitcoin is, a very small change in bitcoin price really cannot be connected to CPI Inflation price because the movement that took place a few days back has in fact completely retraced back in last week especially today, so it's really hard to say whether it was due to this report or not. Also whether only US CPI will affect the bitcoin price or other country's CPI would also effect the bitcoin price that is also a major question.

No one is saying only CPI is affecting the price of Bitcoin, how could anyone say that? One thing I've noticed is that you guys are always moving away from the subject matter when you reply. This topic was on the effect of inflation on Bitcoin, so should I drag others to it? Why? Inflation can never be the only factor affecting Bitcoin but I can't include that in the inflation discussion.

Everyone gives reasons for the price movement but hardly wonder why it happens when the one who controls the price says it will happen.
I guess we could choose a time period when almost everyone expects the price to go in a particular direction so that the one who controls the price makes it go opposite direction.

The rising inflation of the U.S. dollar. While inflation is on average 2% each year, recent stimulus spending is poised to greatly increase the level of inflation and decrease the dollar's purchasing power.

With the recent stimulus packages, the United States has added around $2.4 trillion to the economy. This has many worrying about the inevitable decrease in the dollar's purchasing power and the rise in inflation.

You are getting one thing wrong, no one controls the market, and if you know anyone that controls the market, spit it out. No one knows it all, we as holders and traders of Bitcoin should know how to speculate through economic and technical ways, which I see nothing wrong in bringing a good idea on board. Or do you want to tell me that CPI does not affect Bitcoin?

I think the CPI is a big changer, not just in crypto, but the effect it has on other traditional markets. And can see they were all affecting by the news, everyone goes down, and we can say that crypto market is the most impacted by the news so I will say it has influence all over so much so in our market. So we will see again next month, and hopefully it will not be as felt as we had this month because we are enjoying a good recovery already and suddendly the news change it in snap wiping out the market.

The big question is whether crypto exchanges would see different price trends with higher trading commissions.

Prior to 2017, crypto exchanges charged commissions on trades. It was that post 2017 era where commission less trading was introduced where things may have gone a bit off the rails. That was around the time we began to see decoupling between bitcoin and its historical price trends. I would guess the majority don't pay attention enough to notice those details. There is a long train of events which led to our current day predicament. Being isolated and insulated from history, usually leaves us powerless to fix current issues or prevent future ones.

In attempting to solve modern day problems. It appears most simply support whichever solution involves the least amount of time and effort on their part. If its true that we can expect our results to equal the fruit of our labors. The time and energy we put into something. Then a minimum of effort would appear to correlate with a minimun of results. "An ounce of prevention being worth a pound of cure", further diminishes our returns. Considering our actions are always reactionary and never preventionary in nature.

Market mechanic based technical trading has also arguably become decoupled from historical price trends in traditional stocks and bonds as well as emerging crypto.

Thank you for this! After all, there are some people that know about the market and how inflation is strongly affecting it in recent years. If you read through this thread, you would see a lot of opposition, nearly all that replied opposed me despite being ignorant. I guess it was because I was a newbie when I put the piece together in August. Not knowing that even the best traders/speculators in the world would always join the BTT from a low rank. Another CPI report in September has vindicated me.

See the link to the alert I issued before the news was released on Tuesday: https://bitcointalk.org/index.php?topic=5413398.0