On July 12, the bitcoin price was stable before the release of US inflation data, which in turn injected even more volatility into the asset, according to an analysis by Transfero.
The news that inflation in the United States has surpassed 9.1%, the highest level since November 1981, according to the new CPI report for June, has confirmed the downward trend in bitcoin and the overall crypto asset market.
Currently, bitcoin is trading at US$ 19,700, down 2.09% on the day and 5.06% on the week, with a total market value of US$ 378 billion, according to data from CoinMarketCap.
The leading digital asset lost US$15 billion of its market capitalization in about ten minutes. It fell from US$ 379.91 billion to US$ 364.55 billion following the news of the negative June CPI report.
The inflation data, which presented figures above the forecast, put further pressure on the US Federal Reserve to raise interest rates.
Considering such a scenario, bitcoin, along with other risky assets, has suffered a significant loss in value this year, falling about 72%, as it has failed to serve as an inflation hedge.
The strong employment data released last week sent a signal that the Federal Reserve would be able to perform a soft landing, thus avoiding a recession, despite the substantial rise in interest rates. This was the case, although interest rates have been rising rapidly.
Meanwhile, after reaching a low of US$ 17,600 in June, the general view among investors was that bitcoin would suffer another short-term decline. However, according to Transfero’s analysis, focusing on a medium- to long-term strategy could be an appropriate option within this scenario.
“Thinking about a medium/long term strategy would be very interesting, such as Dolar Cost Averaging, in which the initial amount is divided into equal installments to be invested in equally spaced periods, regardless of the asset price on the purchase dates”.