Billionaire investor David Rubenstein recently joined the podcast “Invest Like the Best” and discussed the impact of Russia’s invasion of Ukraine. Rubenstein explained that the war has caused inflationary pressures in post-Covid economies in Europe and the US, which has catalyzed people’s interest in cryptocurrencies more.
“I was skeptical about crypto in the first place because I realized that the asset has no foundation…If you are in Ukraine or Russia and you want to have some assets while your country is in trouble… a lot of hard work, owning some cryptocurrencies can make you feel better, and you have something out of the control of the government, independent of the bank.” He asserts that crypto adoption will increase as inflation worsens in the following years.
BTC(Bitcoin) is used by many countries as a hedge against inflation, even at war and unrelated. This trend has also attracted the attention of many important figures beyond Rubenstein, such as the Prince of Serbia claiming Bitcoin is the only way to avoid inflation and Max Keizer stating that “Americans with less than 20 Bitcoins won’t work.”
Inflation is higher than expected
The latest data from the US Bureau of Labor Statistics showed that inflation continued to rise and consumer prices in March rose to 8.5%. That figure in February was 7.9% though fuel, engine growth only 6.7% overall inflation could send the market into turmoil.
March’s year-over-year increase was 1.2% year over year. According to Bloomberg data, “consensus economists” expect an 8.4% gain in March. When inflation overheats, as the figures suggest, we are likely to see a massive sell-off in stocks and thriving tech. Unfortunately, Bitcoin often behaves like the technology and goes on a downward trajectory when this happens. However, even if the Bitcoin price is down 4% today, it is still likely to act as an inflation hedge simply by not falling further once the CPI figures are released.
Cryptocurrencies amid inflation
With cryptocurrency markets open 24/7, they have the ability to react in real time to world events. It will be interesting to watch the chain reaction of the top cryptocurrencies if tech stocks drop significantly when the stock market opens for pre-market trading.
Bitcoin moves above $40k as US CPI hits 8.5% pushing inflation higher
Extreme fear is once again dominating the crypto community as Bitcoin (BTC) spends another day trading around the $40,000 mark and the US struggles with the consumer price index (CPI). highest since 1981.
Bitcoin price edged up slightly after March CPI data confirmed that inflation in the US continues to rise, hitting a 40-year high. However, with the BTC price now down 11% since January 1 and inflation at 8.5%, the net price change is only 2.5% in real terms.
Bitcoin fell more than $3,000 on April 11 due to rumors that inflation would soar. The drop was contrary to expectations for an asset class that is seen as an inflation hedge.
However, as we all know, Bitcoin has had price action correlated with tech stocks on a shorter time frame over the past few months.
Is Bitcoin a Hedge Against Inflation?
Before the release of the CPI, many believed that inflation data was priced in the market to be worse than expected. Furthermore, there are concerns that inflation could be even higher as the White House predicts the numbers will be “unusually high”.
It’s unclear how the market will react to the CIP data in the long term, but in the short term, Bitcoin appears to be outperforming tech stocks, reflecting its movement in terms of overall sentiment. body. For example, Nasdaq was up more than 5 points in trading before the news broke.
The crypto community is using Twitter to compare traditional financial savings rates with DeFi and Bitcoin’s potential hedge against inflation due to its fixed supply. This news sent Bitcoin price up slightly, pushing it to over $400 in 30 minutes. Since then, however, the price has dropped back below $40,000.
Sell rumors, buy news
“Inflation is worse than you think” ahead of the CPI release, said MicroStrategy CEO Michael Saylor. The stock market closed on April 11 as traders braced for the worst.
However, Bitcoin bottomed locally around $39,000 before bouncing up throughout the night. This event has led to selling of rumors, buying news as it looks like the market is bracing for inflation even higher than 8.5%.
Current Bitcoin Price
According to the analyst nicknamed ‘Credible Crypto’, Bitcoin’s current price action is largely seen as a retest of key support and resistance (S/R) areas. He posted the following chart outlining multiple retests of this level since 2020.
According to the analyst, the green circle in the middle and the last red circle provide past examples of weekly movements above or below weekly levels, “but it wouldn’t mean anything.” What does it mean if price doesn’t close for confirmation?
“If the price closes below the blue line, I would change my mind, but now there is no reason to do so.”
Details about the on-chain behavior of Bitcoin investors were discussed in the most recent weekly report from Glassnode, which noted that there was “a small amount of investors taking profits.” after BTC broke out of a multi-month consolidation range.
According to Glassnode, “the market has seen around 13,300 BTC profit taking every day since mid-February,” and while the value isn’t “extremely high,” it does appear to be “enough to provide headwinds for the market.” price”.
Overall, Bitcoin’s recent rally has been relatively mild with the market awaiting some strong catalysts, helping to bring fresh impetus and fresh capital into the space.
“MEGA PUMP” coming soon
A strong bullish narrative has been highlighted by trader ‘BTCfuel’ who outlined the following chart showing Bitcoin potentially forming a mega pump.
“When looking at the RSI, the Bitcoin correction in 2022 is very similar to 2021. Strong bullish move is imminent.”
The overall crypto market capitalization stands at $1.856 trillion and Bitcoin dominance is at 40.8%.
WE ALWAYS WAIT FOR WHAT WILL HAPPEN