Fresh volatility could be in store for Bitcoin on Friday as the U.S. gears up to release inflation data for November.
Bitcoin has been dragged further away from $50,000 as trading volumes slump — with the world's biggest cryptocurrency hitting lows of $47,358.35.
It comes after the Chinese property developer Evergrande slid into default after failing to keep on top of debt repayments.
The embattled company has a debt pile of $300 billion, and there have been fears its collapse could send shockwaves through the global economy.
So far, reaction from the markets have been somewhat muted. Evergrande's demise had been anticipated for a while, meaning it's possible this eventuality was already priced in.
Fresh volatility could be in store for Bitcoin on Friday as the U.S. gears up to release inflation data for November.
A Reuters poll of economists indicates that the Consumer Price Index will rise by 6.8% — eclipsing the 6.2% surge recorded in October, which marked the fastest acceleration since 1990.
Bitcoin experienced a sharp surge when October's figures were released — bolstered by the narrative that the cryptocurrency can serve as a hedge against inflation because of its fixed supply.
But it's unclear whether or not BTC will rally again when the latest figures drop, not least because the Federal Reserve has suggested this runaway inflation means economic stimulus will have to end sooner than planned. This could potentially make stocks and cryptocurrencies less attractive, with interest rates increasing.
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MicroStrategy Takes Action
As often happens when BTC declines, investors with deep pockets have been taking the opportunity to buy the dip. One of them is MicroStrategy, which snapped up an additional 1,434 BTC at a typical per-coin price of $57,477.
The publicly listed company, fronted by Michael Saylor, now owns 122,478 BTC — taking the total cost of its acquisition to $3.66 billion. At the time of writing, this crypto stash is worth $5.9 billion — resulting in paper profits of $2.3 billion.
It could be argued that Saylor's continued acquisitions, which are enabled by taking on further debt, are getting increasingly risky. The average price paid per Bitcoin has been steadily increasing over recent months… all while BTC's bull run shows signs of running out of steam.
Despite these short-term wobbles, analysts remain confident that Bitcoin can regain upward momentum in early 2022 — with ARK Invest's Cathie Wood doubling down on her prediction that BTC can hit $500,000 if the cryptocurrency is adopted by a greater number of institutions.
