Bitcoin, altcoins and stocks drop as inflation fears impact investor confidence
May 12, 2021. Summarized by summa-bot.
Compression ratio: 29%. 1 min read.
Rising fears of inflation and big government spending rocked equities markets and possibly had a knock-on effect on Bitcoin and altcoin prices.
Data from Cointelegraph Markets and TradingView shows that as meme tokens sold off, Bitcoin (BTC) price continued its recent weakness and declined nearly 8% decline to $53,500 before recovering to $54,700.
According to Chad Steinglass, the head of trading at crypto capital markets firm CrossTower, “BTC is actually doing a reasonable job of performing like a store of value” especially when compared to wider financial market developments, including the serious pressures facing growth equities which were “exacerbated by the May 12 CPI print which is being interpreted as a trigger for earlier Fed tightening. ”
Steinglass highlighted the fact that Bitcoin's struggle to escape the trading range it has been in for 3 months may be a symptom of its new role as a store of value and he hypothesized that traders who hold BTC in their investment portfolios may be “selling BTC and especially GBTC in order to raise cash liquidity as they lower their overall leverage. ”
When it comes to Ether, Steinglass indicated that “ETH is in a new regime of price discovery” due to “upcoming changes in the protocol which will both remove inflation and also create incentive to hold tokens for proof of stake,” making it hard to know what a “good new fair value for ETH will be. ”