June's inflation hits 9.1% for the first time since 1981, with housing, energy and food getting more and more expensive while purchase power is depleting.
Article written by Chakkrit Charoenlai - 14.07.2022
June's inflation hits 9.1% for the first time since 1981, with housing, energy and food getting more and more expensive while purchase power is depleting.
The higher than expected rate of only 0.3% drove down the markets after the news. Some crypto enthusiast should already have noticed that also the cryptoverse plunged as well following Bitcoin steps, but why?
The investment world is not dominated by retail investors, it is dominated by institutions with mandates and heavy regulations. Where retail see opportunity, institutions see it as a risk asset. When inflation is high and interests rates are high too, Institutional investors goes on risk management mode and try to limit the possibilities of a loss by selling their risk assets, such as Bitcoin, to buy cash or cash flow equity.
Even though some see crypto as the future of currency, today cash is still the king. High inflation forces the Central Bank to higher the interest rates to try to reduce the amount of circulating supply, which makes cash less accessible, thus making risk assets even riskier.
For swing traders that know those mechanics in the markets, it was a lucrative moment to buy the dip because, as for now, BTC regained its lost value from the inflation news.
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