An image of bitcoin and the U.S. currency is displayed on a screen at the Interpol World Congress in Singapore on July 4, 2017.
Roslan Rahman | AFP | Getty Images
Cryptocurrencies fell on Tuesday amid a market sell-off following a higher-than-expected CPI reading.
Bitcoin was down 3% at $48,535.17, according to Coin Metrics. The day before, it had crossed the $50,000 mark, reaching its highest level in more than two years.
The move began when the U.S. Bureau of Labor Statistics reported a larger increase in the consumer price index in January than economists surveyed by the Dow Jones had expected. This report sent yields soaring, the benchmark index 10-year US Treasury yield a 10 basis point hike and pressure on risk assets as investors began to worry that the Federal Reserve would not be able to cut rates multiple times this year as they had previously expected.
“At the moment, we expect the cryptocurrency rally to continue,” said Nico Cordeiro, chief investment officer at Strix Leviathan. “However, investors should expect long-term weakness if inflation continues to be higher than expected, which tends to run counter to the prevailing belief that Bitcoin is a hedge against inflation.”
He also stated that he believed Bitcoin was not a hedge against inflation but rather an indicator of liquidity within the financial system.
Bitcoin falls to key $48,000 level
The crypto exchange Coinbase fell 4% and Bitcoin proxy Microstrategy lost 5%. Miners also suffered losses, albeit slight compared to the previous day’s double-digit gains. CleanSpark And Iris energy were lower by 4% each. Digital marathon slipped 9%, and Riot platforms declined by 5%.
Bitcoin remains hovering around $48,600, a level watched by investors and chart analysts. Multiple closes above this level would support new highs above $50,000 and potentially an all-time high. The coin reached its all-time high of $68,982.20 on November 10, 2021.
Somewhere else, ether and that of Solana GROUND The token outperformed, hovering slightly above the flatline after paring past gains.
Yuya Hasegawa, a crypto market analyst at Bitbank, the Japanese bitcoin exchange, noted that ether led the crypto rally on Monday when it rose 5.5% to its highest level in a year. month. He said the price had been supported by anticipation of Ethereum’s next big technology upgrade in March, called Dencun, and renewed interest in NFTs, or non-fungible tokens, from the crypto community.
“The price could be ripe for a minor correction in a week or so, but its upward trend will likely continue due to improving demand via ETFs and technical sentiment,” he added .
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