In new developments, crypto prices have been negatively impacted by the record-high rates of global inflation. These near double-digit inflation rates have led cryptos such as bitcoin to dip 8% as analysts expect the dip to continue.
Cryptocurrency Market Price Drop Report
On Thursday, bitcoin, the largest crypto, experienced a negative price shift of 7%. This negative price change came after the crypto had rallied on the previous day. On Wednesday, the price of bitcoin went up to $40,050, a 3% rise. The dip meant that bitcoin had gone below its resistance level: While the resistance level was set at $40000, bitcoin prices dropped to $36,967. According to experts, this trend is set to continue. According to Kate Stockton, a technical analyst affiliated with Fairlead Strategies, bitcoin prices are predicted to drop by around 20%. This price change would see the crypto’s price drop to $27,200.
This price drop has affected other cryptos as other major tokens such as ethereum, solana and bnb have also dipped. In the last 24 hrs, these cryptos’ prices have dipped by over 7%. Given that bitcoin’s price is set to drop again,
This trend of inflation has affected many other countries around the world such as Turkey and Argentina. In these countries, inflation hit 70% and 50% respectively. These high rates caused severe damage to the economies and panic amongst citizens. This level of inflation is the highest recorded in the decades.
Traversing through the Dip
While initially believed to be immune to inflation, several changes have occurred to refute this belief about cryptos. These changes have reinforced the classification of cryptos as volatile assets. The drop in prices is attributed to several reasons that include correlation with the stock market, policy changes and conflict.
Through the continued correlation with traditional markets such as the tech savvy Nasdaq 100, cryptos has contributed to the dip. The assets have adapted to become similar to stocks as a result of the growing relationship with traditional finance institutions as institutional investors join the bandwagon. Due to these changes, the dips experienced by cryptos and the stock markets are similar.
Inflation is On the Eyes of the Global Economy
Policy changes have negatively affected the prices of cryptos. Recent policies announced by the Biden administration introduced a half-point interest rate hike. While initially spurring a rise in prices, the hawkish policy holds the potential to backfire and lead to another recession. This outcome resulted in many individuals selling off the asset, hence, the price dip.
The ongoing war between Russia and Ukraine has also led to even more uncertainty. Given that Russia is a large part of the global economy, the ongoing conflict has created even more problems. The conflict has affected crypto distribution and led to the introduction of policies that undermine the value of assets held. The sanctions announced against Russia are a key part of the actions taken by other countries to try and resolve the conflict. However, given that the war is imminent, things may play out any way and lead to even more problematic outcomes for the economy.