Quote from: kotajikikox on Today at 11:28:05 AM

The biggest cryptocurrencies in the world dipped sharply Thursday after the latest inflation data showed wholesale prices are rising much faster than expected. The price of Bitcoin is down 3.8% on the day ($117,900), Ethereum is down 4% ($4,535), and Ripple is down 6.1% ($3.07) according to CoinMarketCap.

Crypto prices are responding to the Producer Price Index (PPI) for July, which measures the average change in prices from U.S. manufacturers and service providers. It rose by 0.9%, according to the Bureau of Labor Statistics, the largest monthly increase since March 2022, according to the Wall Street Journal.

Why is it that bitcoin and other cryptocurrencies have declined in response to the inflation rate rising? Should the response be the other way around? Bitcoin is anti inflationary so it makes more sense to use bitcoin to protect the value of your bitcoin. So, why was the response like this? What do you think so?

in theory bitcoin is designed to be anti inflationary because of its limited supply but in reality markets don’t always behave by theory.. when inflation data comes in hotter than expected.. it usually means the fed could keep interest rates higher for longer... higher rates make traditional assets like bonds and usd more attractive.. so big investors tend to pull money out of riskier assets like crypto... it’s less about bitcoins long term design & more about short term liquidity and investor psychology.. i would say people still see crypto as a high risk investment.. so it often reacts negatively in the short run to inflation shocks even though the narrative of bitcoin as an inflation hedge could still play out in the long term

edroi

Posts

Merits