Bitcoin hit a new high for 2024 on Wednesday, rebounding from a brief decline on Tuesday driven by disappointing inflation figures, analysts reported. Both equity and forever also experienced increases.
Bitcoin (BTC) approached the $52,000 mark Wednesday morning in New York after hovering around $50,000 for two days. The leading cryptocurrency suffered losses of up to 2.8% on Tuesday after the release of the latest consumer price index (CPI) data, which revealed an annual inflation rate of 3.1%, surpassing economists' expectations.
According to Noelle Acheson, author of the newsletter "Crypto is Macro Now", Bitcoin's reversal shows that the asset is influenced by both risk-on and risk-off sentiment. He stated, "I have been saying for some time that when we experience a sharp stock market correction, bitcoin will also likely suffer as it tends to get dumped along with most other liquid and high volatility assets as investors rush to get out." Acheson emphasized that Bitcoin may never be completely removed from the macroeconomic narrative and may still be considered a risk asset by some investors.
Acheson assumes that Bitcoin will continue to rise with monetary easing, but investors are expected to turn to the cryptocurrency in times of market turmoil because of its potential as a hedge against currency devaluation and geopolitical instability.
Similarly, Ether (ETH) saw a surge on Wednesday, rising nearly 5% and marking a roughly 16% gain for the week.
Stocks showed signs of recovery on Wednesday, although the S&P 500 and Nasdaq Composite indexes have yet to fully recover from losses triggered by Tuesday's CPI release. At reporting time, the S&P 500 was up about 0.5%, while the Nasdaq Composite was up about 0.7%.
After analyzing US CPI data, inflation figures from the UK were lower than expected, showing steady price increases of 4% year-on-year. This positive inflation data contributed to the rise in stock futures heading into Wednesday's trading session, as noted by Tom Essaye, founder of Sevens Report Research.
The essay highlights the importance of understanding that although the CPI report influenced the market decline on Tuesday, stocks did not fall because the CPI indicated a resurgence in inflation. Instead, the decline was caused by the CPI report being the first data in 2024 which did not support the optimistic assumptions driving the market rally.
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DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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