Prices Keep Rising But Bitcoin Still Doesn’t Behave Like the Inflation Hedge It’s Meant to Be | Currency News | Financial and business news

• Inflation concerns were further fueled on Tuesday when the CPI experienced its largest month-on-month increase in 13 years.
• Still, bitcoin, widely viewed as a hedge against inflation, fell after the CPI reading.
• Some bitcoin bulls, however, argue that the cryptocurrency will prove its use as a hedge against rising prices.
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Inflation concerns were fueled on Tuesday when consumer prices between May and June saw their biggest month-on-month increase in 13 years, but bitcoin, often touted as a hedge against a weaker dollar, did not did not react accordingly.

US stocks plunged on the open, while bitcoin was stable, then fell steadily throughout the morning and early afternoon. The price of the world’s largest cryptocurrency by market cap fell about 2%, below $ 33,000 for most of the day after the CPI figures were announced.

The asset was trading at $ 32,854 at 1:10 p.m. ET on Tuesday.

This has also happened with previous readings. In May, bitcoin fell 7% on a day when CPI data showed prices were rising at their fastest pace since 2008. Theoretically, with higher inflation, demand for assets that can serve as stores. alternative values ​​to cash would increase – bitcoin among them.

“Bitcoin no longer behaves as an inflation hedge and will continue to beat expectations for higher returns,” Ed Moya, senior equity analyst at the Oanda exchange firm said Tuesday.

This inflation is seen as transient, however, could be a reason the June report was not a sufficient catalyst to break bitcoin sideways trading, Moya added.

Bitcoin has long been touted as a hedge against inflation, mainly due to its limited supply of 21 million coins. The idea is that bitcoin has a similar purpose to gold in protecting itself against reckless tax policies that devalue fiat currencies.

Billionaire investor Mike Novogratz once said that the value of bitcoin has risen because governments print money like “toilet paper.”

Some bitcoin bulls, however, maintain that the cryptocurrency will still prove its usefulness someday.

“Bitcoin remains a long-term inflation hedge for most investors,” John Wu, president of Ava Labs, the team behind the avalanche of altcoins, told Insider.

He continued, “However, given the number of new investors in the space, there are investors who view it as a risky asset and these additional investors may sell short term as a source of funds.”

The price of Bitcoin has been limited since a larger cryptocurrency crash in May.

But it appears the digital asset is holding its own at its $ 30,000 support level as it is tested, Julius de Kempenaer, senior technical analyst at the Technical Analysis Platform, told Insider. StockCharts.com.

“As a result, a possible breakout below this level will become increasingly significant,” he said. “If and when that happens, $ 20,000 is on the cards as the next level of support to watch out for.”