Why Is Bitcoin Falling Today?
Bitcoin (BTCUSD) fell below $87,000 Tuesday—a sharp drop from the $95,000 level at which it was trading two days ago and the $100,000 mark it tested late last week—as fears about economic uncertainty deepened the sell-off in the cryptocurrency markets.
Bitcoin now down about 20% since hitting an all-time high of $109,000 last month just prior to U.S. President Donald Trump's inauguration.
After remaining range-bound in recent weeks, bitcoin's sudden drop may be attributed to increasing worries about U.S. economic factors, especially inflation and trade policies.
In a press conference Monday, Trump reiterated that tariffs on Mexico and Canada will go ahead as planned. Economists have long feared that imposition of tariffs could reignite inflation. Crypto investors will also be watching Friday's inflation data—known as core Personal Consumption Expenditures (PCE), the Federal Reserve's preferred inflation metric—for clues after the January Consumer Price Index (CPI) came in hotter than expected.
Persistent inflation would make it harder for the Fed to aggressively cut interest rates, which isn't great for investors in risky assets such as crypto or stocks. Higher rates imply higher yields on less-risky Treasurys, and that prospect has shaken equity and crypto markets alike.
Is this sudden drop an opportunity for investors to scoop up bitcoin for a more favorable price? Not really, according to Standard Chartered Global Head of Digital Assets Research Geoff Kendrick.
«DO NOT buy the dip yet, a move to the low $80s is on,» Kendrick wrote in a research note that Coindesk reported Tuesday, adding that, «Before buying the dip is attractive I think we get a $1B [exchange-traded fund] outflow day.»
Investors pulled out
Read more on investopedia.com
