“The logic assumed regarding the relationship between the price of Bitcoin and inflation data does not appear. This becomes clear if we look at the monthly change in the price of the asset and the broader drivers that have a greater impact on the cryptocurrency price,” the experts said.
In their opinion, a tightening of the interest rate, as well as its reduction, changes Bitcoin quotes, since the first cryptocurrency is perceived by investors as a tool for hedging risks from the depreciation of fiat currency.
During periods of low interest rates, people are more likely to invest in high-risk assets such as Bitcoin. The Fed’s recent period of stable rates and its fifty basis point cut in September coincided with rising asset prices, experts noted.
In addition, the reduction in the Fed interest rate largely indicates a decrease in inflation rates, which indicates an indirect connection between changes in the value of Bitcoin and an increase in the purchasing power of the population in the United States.
Earlier, analysts at the investment company 10X Research said that the bullish trend in Bitcoin is supported by the so-called “black hole effect.” Market trends indicate that the value of the first cryptocurrency could reach $100,000 by the end of January.
Source: Bits
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