U.S. inflation has grown worse in February to a fresh four-decade high. The consumer price index (CPI) rose 7.9% which is a 0.5% increase from January. The Russian-Ukraine conflict is the main reason behind this massive drop. However, Bitcoin price didn’t react much to this fall. BTC prices dropped to the $38,500 mark then quickly jumped over the $39,000 level. While, Ethereum traded at $2,600.
US Inflation Rises to 7.9%
The US Bureau of Labor Statistics releases the numbers every month. 7.9% is the highest number recorded since January 1982. As per the report, the food and energy index rose by 6.4 percent which is the largest 12-month change since August 1982.
Earlier, European Central Bank announced that its bond purchase program would be reduced citing the general rise in prices caused by the Russian invasion of Ukraine. The central bank assured that all necessary actions would be taken to attain price stability and financial stability.
U.S. stocks looked under pressure as S&P 500 index opened 1% lower on Wall Street. In the past few instances, the Cryptocurrency market has also followed the trends. The world’s largest crypto Bitcoin is trading at $39,126, down by 7.31% in the last 24 hours. BTC has declined by over 8% in the last 7 days. The second-largest token, Ethereum has also witnessed a drop of more than 5% in the past 24 hours. However, most of the cryptocurrencies have plunged in the last 7 days.
BTC analyst hints why crypto market can dump
Inflation combined with Russia-Ukraine crisis is no working well for Bitcoin as expected. Bitcoin is failing to flip key resistance in $42k-$45k range and market sentiment is extremely bearish right now. Gold on the other hand is showing signs of bullish breakout. Hence, clearly investors are not accepting Bitcoin as a safe haven rather as a risk asset.
To make things even worse many crypto experts including Bitcoin on-chain analyst Willy Woo have dropped bearish predictions. He shared a theory that can be the reason behind the decline in the crypto market. According to Willy Woo, early BTC buyers with more BTC holdings are fine with crypto crash as they can wait to refill again at cheap prices . He hints why early investors are waiting until bulls capitulate.
The thing is, the people who bought at $200, who are more in BTC holdings than any recent buyer above $20k, are perfectly fine to dump until bulls capitulate, so they can by back their coins much cheaper.
Just laying out the game theory. No one knows the future with certainty. https://t.co/KUmf66ZH7Y
— Willy Woo (@woonomic) March 10, 2022
This simply means implies that large addresses might prefer selling right now so that they can buy BTC at much-discounted prices.