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Market value for most digital assets rose 3.3 percent to $ 44,085 on Wednesday.
Who Bloomberg
Posted on January 12, 2022
Bitcoin rose to more than $ 44,000 for the first time in a week, as most U.S. inflation over the past four decades has sparked controversy over hedging against rising consumer prices.
The largest digital asset at market value rose 3.3% on Wednesday to $ 44,085, up 7% from 2021 after the release of the consumer price index. This means that US inflation has been the biggest gainer since 1982. Some market participants. he speculated that the rise would be greater, with other so-called risk assets, such as helping to send shares higher.
“Today’s inflation was on the line and maybe the Fed doesn’t need to accelerate its tightening, which means cryptocurrency forecasts could be slightly better,” said Michael Reynolds, vice president of investment strategy at Glenmede. “As the Fed raises rates as it becomes more attractive to hold assets in cash, we would expect it to blow away some of the wind of cryptocurrency asset sales.”
Proponents of crypto have long argued that Bitcoin and other digital assets, because they are an idiosyncratic asset class, could be placed as hedging against rocking in other areas of the financial market. Only 21 million Bitcoin will be put into circulation according to the computer protocol that regulates its issuance, although this number will not be achieved for several decades.
Other cryptocurrencies also rose after data were released on Wednesday. Ether rose 4.5% to $ 3,375 in New York from 1:12 p.m., while the Bloomberg Galaxy Crypto Index rose 3.5%.
“What we’re seeing today is not‘ yes, hedging inflation ’and all of that, risky assets are reintroduced,” said Noelle Acheson, head of market vision at Genesis Global Trading Inc. That’s because “we don’t think Powell will raise rates as much as the market has discounted, because inflation was in line with expectations and not worse.”
Sure, Bitcoin or any other cryptocurrency can still be a good hedge for inflation inflation, even though prominent analysts and investors claim so. Some believe that Bitcoin does not exist long enough to ease its inflation hedging situation, while Cam Harvey, a professor at Duke University and a partner at Research Affiliates, has long said it behaves like a speculative asset. tends to have periodic accidents.
“The jury is still out on Bitcoin inflation coverage and only time will tell,” Austin Vincent, Gullane Capital’s vice president, said by phone from Memphis.
However, Wednesday’s advance was a welcome addition for anyone who has seen prices fall in recent weeks as the Federal Reserve becomes hawkish. New retail investors have not accumulated since the crash of Bitcoin in early December, according to a Blockforce Capital analysis that used Glassnode data. To make matters worse, most of the short-term market participants – who have largely entered the market in recent months – are flooded with their investments. As of Tuesday, the average price they paid was higher than the price of a single Bitcoin, Brett Munster of Blockforce wrote in a note.
There’s a lot of resistance around $ 52,000, “and until we break above and hold on to it, we can continue to see volatility in the short term,” Munster said. “However, if we break above and stay above, the sales pressure disappears and new entrants are likely to re-enter the market. That could lead to a price increase that we all expected. “
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