- A bear market crisis has been marked in the bitcoin market this quarter.
- A major reason for this is CPI (Consumer Price Index).
- According to speculations, the CPI is directly proportional to the falling pressure on bitcoin prices.
The Crypto Crash
The crypto market is one of the most volatile markets in the world. This becomes even more dangerous in the case of bitcoin. We know that the currency fell drastically during recent times, $51K to be precise, from $68,000 to $17,000. This has marked a severe bear market crisis for the cryptocoin. The cryptocurrency is in the middle of short-term volatility. This is when the CPI numbers are announced. But is also well-known that this CPI is announced monthly, whereas bitcoin only got affected in July 2022. CPI, by the way, refers to Consumer Price Index.
There were many reasons for this crypto crash—one of the greatest being the high inflation rate. Now, the CPI has been introduced. This has the potential to impact the entire economy of the world. I know this sounds dramatic, but high inflation will become a critical and famous global issue, specifically in the world of finance. Because of this, crypto investors have no option but to reorganize their crypto portfolios. This is going to cause massive volatility in the community of bitcoin.
Relation With CPI
The price of the BTC cryptocurrency is US$21,282.53 at the time of writing, with market size of US$406.30 billion and a volume of US$25.13 billion. While flying the bear crypto flag has lowered the currency’s attractiveness. It is extremely advantageous for short-term investors using a buy-the-dip approach, but it presents a significant loss for long-term BTC investors. From June 2022 to July 2022, or from US$17k to US$21k, Bitcoin was able to increase the price of its cryptocurrency.
According to speculations, the CPI is directly proportional to the falling pressure on bitcoin prices. This phenomenon is accounted for because of the US Federal Reserve’s strict policy. The policy is concerned with the hikes in interest rates. The CPI is a very common index observed by many short-term investors. This is because this CPI can be used as a hedge against inflation. This methodology has become a general market practice nowadays.
Source: https://www.thecoinrepublic.com/2022/07/18/how-is-cpi-affecting-bitcoin/