If you are wondering why the value of Bitcoin has been slowly decreasing over the last few years, then take a look at the article about how inflation is what’s causing it to fall. In this article, we’ll see how changes in interest rates can have an effect on currency values and how some economists believe that Bitcoin could become obsolete.
Bitcoin prices plummeted as markets reacted to reports of unexpectedly high inflation data from the United States. The report showed that annual inflation rose to 8.6% in August, far higher than the 2% those economists had been expecting.
This news has spooked markets, with Bitcoin prices dropping by around 4% and Ethereum 7% in response. This is the lowest weekly close for Bitcoin since early June 2022, and it suggests that investors are becoming increasingly worried about the long-term prospects for the economy.
The high inflation data is likely to cause concern about the sustainability of the current bull market in stocks and other assets. If economic conditions continue to deteriorate, this could lead to a sharp decline in asset prices, including Bitcoin and other Altcoins prices.
The CPI, which is the most common benchmark for inflation in the U.S., rose to 8.6% in May 2022. That caused BTC to drop by $500 earlier during the New York trading day.
The global inflation rate is now 7.9% year over year, and the median U.S. inflation rate is 2.36% year over year. The U.S.’s inflation rates are starting to rise, and investors need to reduce their risk exposure to protect themselves from this type of financial instability. Deutsche Bank said ‘The shock value from U.S. inflation has lessened even if today’s print was pretty shocking in itself.’ said the bank in a research note. Stocks dropped, gold prices rose and interest rates increased on Friday.
Bitcoin Price Faces Lowest Weekly Support 25,000
The daily chart shows that the price of Bitcoin is dropping, which suggests it will keep going down like it had been in November last year.Bitcoin price dropped, last week resistance level 32,500, which means it lost its upside momentum and is likely to continue to be lower support.
If the price rebounded and was high enough to reach the weekly moving average, then it might stop decreasing. However, if a sharp decline happens, then it might stabilize at from $18,000 to $20,000, which is 75% of BTC’s previous price from March 2020.