Key Takeaways
- Bitcoin floats rangebound between $39,000 to $40,000 as volatility has declined
- The price of bitcoin remained solid as the Federal Reserve upgraded its inflation forecast
Bitcoin Dips Below $40,000
The cryptocurrency market has had a relatively calm and quiet trading week so far. Crypto enthusiasts seem unable to produce a clear-cut break above the $40,000 mark even after the Elon Effect provided a much-needed push over the weekend. The 15% jump in Bitcoin’s price following Elon Musk’s announcement Tesla could reconsider Bitcoin as payment wasn’t sustainable.
Soon after Bitcoin reached its weekly high of $41,300 on Tuesday, the market dropped. And the coin declined 8% for the period Tuesday to Wednesday. Presently, the digital currency is trading in positive territory, aiming to maintain its price above the $39,000 milestone. Bitcoin’s price now floats around $39,200, up 2.5% on the day so far.
Bitcoin Stands Strong in the Face of Inflation
Despite the lack of heightened volatility, over the past 10 days, Bitcoin has been climbing. On June 8, Bitcoin slumped to a low of $30,900, reaching the levels from the crypto market crash in mid-May. Since June 8 to current market price, Bitcoin has advanced over 25%, or roughly $8,300.
The digital currency yesterday stayed true to its reputation as a hedge against inflation. The price of Bitcoin on Wednesday barely budged as the Federal Reserve announced an interest rate hike is coming a year earlier than planned, in 2023.
The US central bank addressed the higher inflation and said it may last longer than previously expected. The Fed believes the current inflation rate, which is at its highest since 2008, would fade as the economic recovery continues. While global stocks slid as a response to Fed Chair Jerome Powell’s statement, Bitcoin’s price remained solid and slightly to the upside.
Many crypto proponents say that Bitcoin’s price moves in an uncorrelated way to stocks, despite signs that growing correlation to stocks has translated to the cryptocurrency market since the pandemic-induced crash in March 2020. Against this backdrop, Bitcoin’s price kept looking up as the Fed Chair upgraded the central bank’s inflation projection for the fourth quarter to 3.4%, up from 2.4% forecasted in March this year.
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