Bitcoin Nears $25,000 as Inflation Slows in U.S. — But Analyst Says Crypto Underperforming
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Bitcoin Nears $25,000 as Inflation Slows in U.S. — But Analyst Says Crypto Underperforming

1 month ago

"Nasdaq is back to May levels, while Bitcoin is still down 20% from there. Not the strongest bounce, still lots to gain and to earn," Michaël van de Poppe warns.

Bitcoin Nears $25,000 as Inflation Slows in U.S. — But Analyst Says Crypto Underperforming

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Bitcoin raced toward $25,000 on Thursday after new figures showed inflation in the U.S. is slowing down.

The Consumer Price Index rose 8.5% year on year in July — and while this is way above the Federal Reserve's target level of 2%, it is a marked improvement on the 40-year high of 9.1% that was seen in June.

Analysts had been expecting the figure to come in at 8.7% as the effect of lower gas prices began to trickle down to consumers.

The better-than-expected reading may mean that the Federal Reserve may be less aggressive when it comes to increasing interest rates in the months ahead.

But it may be a little too early to suggest that inflation has hit its peak — and some countries, including the United Kingdom, fear the Consumer Price Index could hit 13% by October.

As of 11am London time on Thursday, Bitcoin was trading at $24,423 — up 5.95% on the day and 6.56% on the week.

CoinMarketCap data shows the world's biggest cryptocurrency hit highs of $24,669.13 a little earlier in the day.

What's Next?

Investors are now waiting with bated breath to see whether BTC can break through $25,000 — a price that hasn't been seen for almost two months.

Stock markets around the world have also been propelled higher, while the dollar suffered its biggest fall in five months.

The S&P 500 closed Wednesday's trading session 2.13% higher at 4,210 — the highest level in more than three months. Meanwhile, the Dow had risen by 1.63%. The tech-heavy Nasdaq accelerated by 2.89% — hitting 12,854 — its best close since late April.

Analyst Michaël van de Poppe was cautious in his assessment of the crypto market's performance, tweeting:

"The entire collapse of the crypto markets started when LUNA happened, which was when BTC was swinging around $37,000. Nasdaq is back to May levels, while Bitcoin is still down 20% from there. Not the strongest bounce, still lots to gain and to earn."

Economists are also warning that the long-running challenges surrounding inflation, exacerbated by the coronavirus pandemic and the war in Ukraine, may be far from over.

While the Consumer Price Index may continue to head lower in the coming months, there are fears that it will settle at a level much higher than the Fed's 2% target.

President Joe Biden has admitted that American consumers are still hurting — but has attracted criticism after claiming that there was "zero" inflation in July.

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