What Causes Today’s New Bitcoin Price Drop?
The abrupt plunge from $31,500 to below $30,000 this afternoon came as US Consumer Price Index (CPI) figures were released.
Inflation was 8.3%, 0.2% higher than previously estimated. Still, it fell 0.2% compared to the previous month’s figures. According to analysts, this could mean that we are past the peak of inflation.
At 8.3%, the CPI beat estimates by 0.2%, but was still down 0.2% compared to last month’s reading. Reactions naturally began to focus on the idea that peak inflation might be over.
Inflation is higher than expected, but it shows the first decline in two years. Last month we saw an inflation of 8.5%. So it looks like we’re seeing a leveling off and so inflation has peaked.
The drama that is playing out in the crypto market with Terra and its stablecoin TerraUSD also does not help a recovery of the crypto market. The selling pressure is enormous and the LFG has had to sell almost all of its BTC tokens in reserve to keep the stablecoin afloat. However, this still doesn’t seem to be enough. The price of the UST stablecoin is at the time of writing around $0.40.
Furthermore, statistics show that large crypto whales are selling their Bitcoins en masse. It all adds up to unprecedented selling pressure that could crash the market much further, it seems. For now, the $30,000 level is extremely important to watch. If this level still manages to maintain, a recovery may still be possible.