Bitcoin Briefly Falls Below $95,000 Amid Renewed Inflation Concerns
Bitcoin briefly dipped below $95,000 following stronger-than-expected inflation data, indicating that rising inflation could lead to more attractive Treasury yields compared to bitcoin. Although bitcoin prices have recently been volatile, inflows into spot bitcoin ETFs remain positive this year. Experts debate bitcoin’s nature as a risk-off asset, as it often trends with risk-on assets like stocks.
Bitcoin experienced a brief decline below $95,000 following unanticipated inflation data that exceeded expectations. This rise in inflation, accompanied by a likelihood of sustained higher interest rates, renders Treasury bonds more appealing to investors compared to bitcoin. Despite bitcoin being considered a potential safe-haven asset, its performance often aligns with risk-on assets, particularly in response to inflation data releases.
After hitting an all-time high surpassing $109,000 on January 20, just ahead of the inauguration of U.S. President Trump, bitcoin’s trajectory has been turbulent. While some experts have suggested categorizing bitcoin as a risk-off asset, akin to gold, recent trends indicate that it moves parallel to traditional stocks, which also faced declines post-inflation report.
In spite of the recent fluctuations in bitcoin’s pricing, inflows into spot bitcoin exchange-traded funds (ETFs) have shown consistent positivity every week this year, according to Farside Investors. However, it is noteworthy that spot bitcoin ETFs are reporting significant outflows, amounting to $243 million so far this week.
In summary, Bitcoin’s price volatility remains influenced by inflationary pressures and interest rate speculations, compelling investors to weigh the attractiveness of traditional Treasuries against cryptocurrency. Despite its movement correlating with risk-on assets rather than safe havens, ongoing inflows into spot bitcoin ETFs demonstrate persistent interest among investors. The market will likely continue to navigate turbulent conditions amid economic uncertainties.
Original Source: www.investopedia.com
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