BTC Plunges As Critical US Inflation Data Is Released: What Can We Expect?

BTC plunges as critical US inflation data is released after the coin performed an incredible bounce in the early morning session and breached $55,000 so let’s read more about it in our latest Bitcoin news.

Retreating US bond yields prompted traders to sell the multi-week top but the bullish sentiment kept BTC above crucial support levels while the market awaited a Consumer Price Inflation report. BTC plunges as critical US inflation data report is awaited and went through an aggressive short-covering move but there was a strong move upwards that marked the cryptocurrency’s second gain in a row thanks to the supportive catalysts like the institutional adoption. However, the Asian session matured and BTC showed there were not enough buyers there and prompted a correction which wiped about $10 billion of the market cap.

It seems that the consolidating US 10-year Treasury note yields made BTC bears move back into the dollar and take some of the profits but the cryptocurrency kept a lid on the underlying bullish sentiment while maintaining support above the crucial price levels of $52,000 and $54,000. The market reacted strongly to the spikes in US Treasury yields but the 10-year note offered rate returns of less than 1 percent at the start of the year. As of Tuesday however, it was 1.596 percent boosted by the current selloff in the bond market.

Investors forecasted that the rates will increase in response to the rising bond yields but the Federal Reserve benchmark inflation gauge is hovering about 1.5%. The US central bank repeatedly proclaimed that it aims to purchase government and corporate debts by $120 billion a month and will keep the lending rates near zero. This means according to the FED that the target could be reached by 2022.

This has put BTC on a yearly upside bias as many analysts believe that companies like Tesla, Square, Meitu, and others already purchased BTC as an alternative to cash. Cathie Wood who is the founder of ARK investments said:

“If you think about bonds from this level, this idea of a 60-40 balanced portfolio is a bit problematic. We’ve been through a 40-year bull market in bonds. We would not be surprised to see [Bitcoin] become a part of those percentages. Maybe 60 equity, 20, 20.”

Another analyst noted that BTC’s gains in the past two weeks show the resilience to the bond market sell-off:

 “If rising yields start causing serious problems for mortgages or trigger a new stock market crash, then you can bet that as usual, the Fed will act.”