As investors processed the most recent inflation statistics on Thursday, Bitcoin (Bitcoin stock) and other cryptocurrency stocks saw significant price volatility. The legendary volatility that Bitcoin is known for has been lacking in recent times, and today will be a vital test of whether or not this trend will continue.
In the middle of the trading day, the price of Bitcoin stock price was about $19,200. This is close to where it was before the trading day began and is also back inside the trading range it has been in since the beginning of September.
Earlier in the day, prices dropped down to $18,200. These losses were much worse following the publication of the U.S. consumer price index, but then they started to improve, which is exactly what the stock market was doing simultaneously.
Rising Interest Rates Means Lesser Value for Bitcoin Stock
“The entire globe is looking at the inflation data from the United States to evaluate the next actions that the Fed will make,” said Stefan Rust, the creator of the blockchain-based economic data startup Truflation.
In response to blazing inflation this year, the Federal Reserve has aggressively tightened financial conditions. They have done this by rising interest rates, which has decreased the market for risky assets and has been detrimental to the value of equities and cryptocurrencies. Against this grim economic background, cryptocurrency prices have grown increasingly connected with stock prices, rising in lockstep with major stock market indexes such as the Dow Jones Industrial Average and the S&P 500.
A tight eye is being kept on the Consumer Price Index data in anticipation of the Fed’s next decision on interest rates at the beginning of November. Even though there is a growing likelihood of an economic slowdown, officials from the central bank have made it abundantly clear that they will not back down from their commitment to fighting inflation; consequently, the CPI print will be essential in determining the scope of the challenge that lies ahead.
And the issue of growing costs should not be forgotten. Last month, the Consumer Price Index (CPI) increased 8.2% year over year, which was higher than the 8.1% increase that Wall Street anticipated. Meanwhile, the Core CPI, which excludes changes in food and energy prices, increased 0.6% month over month, which was higher than the estimate of 0.4%.
Not only does the inflation statistics serve as a potential stimulus for the next move in cryptocurrencies, but it also poses a challenge to the recent price stability of Bitcoin compared to equities. While the major stock indexes experienced their worst month since the selloff in March 2020, the price of Bitcoin stock has been unusually stable as of late, staying between $19,000 and $20,000 in September. This comes when Bitcoin is notorious for its extreme price swings.
Bitcoin stock is currently trading at less than one-third of its all-time high from November 2021, and some analysts are interpreting this lack of volatility as a sign that cryptocurrencies have reached their bottom following the harsh bear market seen this year. Others view this as the quiet before the storm. The mounting leverage in the crypto futures market is an unsettling sign that the digital asset markets are just primed for a dramatic shift very soon.
“Crypto still has more TradFi money to shake off before we see the bottom,” said Rust, referring to investors from traditional finance or “tradfi” who may have piled into crypto for the first time during the Bitcoin bull run that began in late 2020. “Crypto still has more TradFi money to shake off before we see the bottom,”
In addition to Bitcoin, the value of Ether, the second-largest cryptocurrency, decreased by 2% to reach $1,300. Smaller or alternative cryptocurrencies fell by a greater percentage, with Solana SOLUSD –3.08% falling by 3% and Cardano falling by 3%. It was much the same for memecoins like Dogecoin and Shiba Inu, both of which lost 2% of their value. Dogecoin (DOGEUSD –0.90%) and Shiba Inu (SHIBUSD +2.45%)
Featured Image: Megapixl © Antalya
Author Marianna Vilchez 
