Bitcoin continued to exude strength on Friday despite worse-than-expected inflation figures earlier in the week. At press time, Bitcoin was trading at 20,905 after surging by over 5% in the past 24 hours and over 10% in the past three days. On the other hand, Ethereum was trading at $1,220 after adding over 12.86%, with XRP, ADA, and Solana increasing by roughly 7%, 5%, and 13%, respectively, according to data from CoinMarketCap.
This comes after Bitcoin’s brief plunge to $19,200 on Wednesday, with the U.S. Consumer Price Index showing that inflation had risen by 9.1% in June, tapping a fresh 40-year-high and overshadowing May’s 8.6%.
In response, President Joe Biden termed the current inflation figures as “unacceptably high,” promising to double down on efforts to lower gas prices. He also stated that they would “give the Federal Reserve the room it needs to help it combat inflation,” a statement that Treasury secretary Janet Yellen buttressed on Thursday. The two statements have been taken to suggest that the Fed could continue to implement more aggressive measures to tamp down inflation.
Whereas markets have been unable to improve after previous CPI figures, Bitcoin seems to have held its ground since Wednesday, raising questions about whether the crypto asset is now inflation-proof. Besides its proven ability to return outsized gains, more investors have perceived Bitcoin as a hedge against inflation following this week’s strength. To others, the crypto asset could emerge stronger from its current situation.
According to Cryptoquant’s CEO Ki Young Ju, the latest CPI numbers are likely already priced, which explains the cryptocurrency’s forbearance. “Everyone is talking about CPI numbers, but I think it’s already reflected in the $BTC price. This one is not an unpredicted black swan for professional investors,” Young wrote in a tweet. According to him, Bitcoin investors are unlikely to sell their coins due to inflation despite being in a lot of pain.
Santiment has also suggested that Bitcoin could be decoupling from traditional asset movements. Following the CPI report, “BTC and altcoins have been recovering while the SP500 and gold drop. If they say uncorrelated, it’s a good sign of a potential breakout,” Santiment wrote.
However, some believe that its price could take one last leg down. According to Alfonso Peccatiello, author of The Macro Compass, Bitcoin may drop to $12,000 before mounting another rally. Speaking to Kitco news on Thursday, Alfonso argued that the plunge was necessary for the market to completely unwind from the havoc caused by “all the pockets that benefited a lot from very strong risk sentiment and very cheap credit in 2021.”