Bitcoin reversed gains made over the weekend, sinking to less than $24,000 after rising briefly above $25,000 for the first time since June 13, fueling enthusiasm among market analysts who believe a bull market rally could be imminent.
The No. 1 cryptocurrency by market cap was trading at $24,113.10 as of around 10 a.m. EDT, after the price rose for a fifth straight day fueled by lower-than-expected U.S. consumer-price index data.
Bitcoin and other cryptocurrencies have struggled in the first half of 2022, with prices falling more than 50 percent as the Federal Reserve raised benchmark rates to combat high inflation. Improving inflation data could mean less-aggressive tightening action from the Fed. Risk assets such as the Nasdaq 100 Index stock guage have seen price gains along with crypto, which has been closely correlated to the Nasdaq for months, Bloomberg reported.
“The Federal Reserve can now avoid raising interest rates, a move attributed to the bloodbath seen in the market,” Ali Raza wrote for Business2Community.
Lawrence Lewittin, managing editor of Global Capital Markets, said on CoindeskTV that bad economic news out of China and falling energy and oil prices speak to fears a slowdown in the economy is expected.
Cryptomode wrote about the bear market in the past tense: “With inflation and looming recession in the wider economy, people simply didn’t have extra funds for crypto, or they needed to sell their holdings simply to pay the bills … deposits are increasing, and some coins are doing well. And remember, the bear market wasn’t as bad as had previously been predicted.”
Sameer Samana, a senior global market strategist at Wells Fargo, told Marketwatch that inflation levels are still high despite easing in July and last week’s rally is “premature.”
As stock markets recover, more people tend to buy Bitcoin as they become optimistic that the asset will also gain, B2B reported.