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Monday, September 26, 2022

Bitcoin climbs above key level after US inflation jump.

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CPI reports have come back stated Inflation has climbed 7%. What of course does this mean for Bitcoin? Many Bitcoin enthusiast have stated that Bitcoin is the hedge against inflation and a store of value, similar to the way Gold is. Only 21 million Bitcoin will be put into circulation under the computer protocol that governs issuance, though that figure isn’t expected to be reached for several decades. As of January 12, Bitcoin has seen a 3% increase. Not necessarily the biggest increase, but something to take note of.

The largest digital asset by market value rose as much as 3.3% to $44,085 Wednesday, following the release of the consumer price index, which climbed 7% in 2021. That means inflation in the U.S. registered its biggest annual gain since 1982. Some market participants had speculated that the increase would be higher, helping to send other so-called risk assets such as stock higher.

Still, Wednesday’s advance was a welcome reprieve to anyone who had been watching prices slump over the past few weeks as the Federal Reserve turns more hawkish. New retail investors haven’t been piling in since the early-December Bitcoin crash, according to a Blockforce Capital analysis that used Glassnode data. Making matters worse is that most of the short-term market participants — who have largely come into the market in recent months — are underwater their investments. As of Tuesday, the average price they paid was higher than the price of a single Bitcoin, Blockforce’s Brett Munster wrote in a note.

There’s still a lot of uncertainty regarding Bitcoin’s role with inflation. According to CNBC, Investors largely expect the Fed to start raising rates in March. Fed Chairman Jerome Powell, at his confirmation hearing Tuesday before the Senate banking panel, did not provide any specific dates but acknowledged that as long as current conditions persist, rate hikes are on the way.

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