Bitcoin Stumbles Due to Inflation... Drops Amid Sharp Rise in US CPI

Evaluation of Inflation Hedge Alternatives Proves Ineffective

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Baek Jong-min] The rise in inflation in the United States has dragged down cryptocurrency prices. The expectation that Bitcoin could be an investment product to hedge against inflation has proven unfounded.

According to CoinMarketCap on the 13th (local time), the price of Bitcoin traded at $32,800, down 1% compared to 24 hours earlier. Ethereum fell even more sharply, trading at $1,933, down 3.9%. Dogecoin is also priced at 19.9 cents, down 3%.

The decline in cryptocurrencies on this day is interpreted as a result of the sharp rise in U.S. inflation in June.

The U.S. Department of Labor announced that the Consumer Price Index (CPI) for June surged by 5.4%, the highest level in 13 years.

As a result, U.S. Treasury yields rose to 1.4%, and the dollar index showed strength, which led to the decline in Bitcoin.

The dollar index, which shows the value of the dollar against major currencies, rose about 0.5%, reaching its highest level since May.

Cryptocurrency media Decrypt reported that Bitcoin, regarded as "digital gold," fell as the dollar strengthened. It explained that Bitcoin, linked to gold prices, declined reflecting inflation concerns.

The analysis suggests that Bitcoin showed weakness in the face of inflation rather than serving as an inflation hedge.

Bitcoin also fell by 7% after the CPI for May was announced to have risen by 5% last month.

Decrypt stated that as inflation rose, Bitcoin's value declined against the dollar. Bitcoin is also considered a risky asset affected by inflation.

Market Insider also reported that Bitcoin is failing to meet expectations as an inflation hedge.

Ed Moya, an analyst at currency trading firm OANDA, predicted, "Bitcoin is not an investment destination for inflation hedging. Bitcoin will continue to be affected by inflation and rising interest rates."

This content was produced with the assistance of AI translation services.