A market rise prompted by US inflation slowing was missed by Bitcoin, raising some doubts about the future of the token. On Thursday, the most prominent digital asset primarily maintained declines of 0.7% from the previous day, as the price of bonds and stocks increased on hopes that the Federal Reserve’s quantitative easing would soon come to a stop.Despite a spike in June, Bitcoin price fell this month as a flurry of US exchange-traded funds were launched by major investment firms including BlackRock Inc. Now investors are wondering how long Bitcoin’s 83% recovery will last.According to Tony Sycamore, an investment analyst at IG Australia Pty, the US inflation report prompted widespread risk taking across almost all asset classes. “This does not seem optimistic to me.”According to Sycamore, there is an increasing likelihood that Bitcoin will drop toward $25,000 to $26,000, or about the area of its 200-day average of movement. Crypto researchers pointed to rumors that the US may be preparing to sell part of the cryptocurrency as a potential explanation for its lackluster post-inflation growth.The crypto jump The disinflationary scenario pouring over after comparatively quick hikes in interest rates should be favorable to risky investments, including crypto,” stated John Toro, head of operations at digital asset marketplace Independent Reserve. However, rumors that US-seized Bitcoin have been moved around hurt sentiment and served to underline the danger that some may be sold.On Wednesday, increases of more than 1% were seen in global ownership, an investment gauge, gold, and oil after the US inflation rate dropped to a level more than two years low of 3%. Currency markets were shaken when the dollar index touched a 15-month low. Continue reading: Inflation at 3% Signals End of Emergency, Fed Turning Point.In sharp contrast to the sentiment across other asset classes, the price of Bitcoin and a measure of the top 100 digital tokens both declined. Some forecasters believe that Bitcoin’s partial turnaround from a crypto crash in 2022 may only be simply a matter of time.According to a letter from cryptocurrency fund operator Grayscale Investments LLC, “we anticipate lower prices in the US and decreased likelihood of hikes in Fed rates to encourage digital asset marketplaces overall over the next several years.” Grayscale claimed that as investor interest in riskier crypto coins grows, Bitcoin’s leadership of the $1.2 trillion digital currency market may decline.However, while eliminating scammers should mean that we have eliminated some significant downside potential risks, it hardly provides justification for a fresh crypto bull economy. Macroeconomic factors, notably the effect of rising prices and rising interest rates on cryptocurrencies and other dangerous investments, will matter more over the course of the upcoming year. The global inflation picture is complicated, but the recent gains in Bitcoin and Ethereum (ETH) appear to reflect a growing belief that America is on an upward trajectory to not only taming inflation but possibly even to a “soft landing” that stops inflationary without destroying jobs.Given that there has been month-over-month deflation, which it may seem odd that any raise at all is on the table. However, this points to another encouraging statistic. Because of the solid job market, an unemployment rate of 3.5%, and some deceleration in wage growth in the majority of recent data, the Fed still needs to exert a bit of pressure. This is how you can see the dump in the market.
Maria Morgan is a full-time cryptocurrency journalist at Coinography. She is graduate in Political Science and Journalism from London, her writing is centered around cryptocurrency news, regulation and policy-making across the glob.