Bitcoin (BTC) falls 5%, breaks with $ 20,000 when inflation in June reaches 8.8%

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The latest consumer price index shows that inflation in June rose to a record high compared with June 2021, reaching its highest level since 1981.

Important points

• News of higher inflation for June sends Bitcoin and the crypto sector south this morning. BTC fell more than 5%, breaking the $ 20,000 key support barrier, and the crypto market in general was down 3.2% at the time of the press release, according to CoinMarketCap.
• Bloomberg reports that the inflation rate in June reached a 40-year high of 8.8% compared to June 2021 and an increase of 1.1% month-over-month from May 2022.
• Experts predict a new 0.75% rate hike from the Federal Reserve later this month to try to curb inflation.

Bloomberg has reported that the consumer price index – more commonly called the inflation rate – increased 8.8% in June compared to June 2021, and represents an increase of 1.1% month-over-month compared to May 2022. This latest jump is the largest of four decades and weighs both stock prices and valuations of digital values ​​across cryptocurrency exchanges.

This morning, Yahoo! Finans showed that the stock markets were down about 1% at the time of writing, while the cryptocurrency sector fell 3.2% – pushing the market value of the entire crypto area down to 885.34 billion dollars, according to CoinMarketCap. Inflation news seems to hit Bitcoin harder and cause it to fall more than 5% in the last 24 hours to as low as $ 19,609, but it has since declined slightly. However, it remains below the $ 20,000 psychological key threshold.

Bitcoin is struggling as an inflation hedge

Bitcoin was originally created in 2008 as a peer-to-peer payment system to serve as an alternative to centralized fiat currencies, which Bitcoin programmers believe can be manipulated by questionable fiscal and monetary policies from government institutions. During its more than 13-year history, Bitcoin has been repositioned as a valuable asset due to the limited offer of only 21 million coins, which has been announced as a strong hedge against inflation.

However, this has not been the case since the price of Bitcoin and cryptocurrencies in general have mirrored the market movements of technology stocks ever since Bitcoin registered its top price of $ 68,789 price per coin set on November 10, 2021. It has since fallen. 71% from that price peak, while inflation has increased by more than 5% every month for more than a year. That situation is unlikely to improve as economic experts and financial analysts predict a new 0.75% rate hike from the Federal Reserve later this month to try to cool inflation.