Bitcoin, the world’s most valuable cryptocurrency, slid under the $27,000 level during the Asia trading day, sparking a market-wide decline in major cryptocurrencies as traders reacted to poor U.K. inflation figures.
This follows a disappointing U.K. Consumer Prices Index (CPI) report, which showed an unexpected surge in inflation, dampening hopes for a quick economic recovery.
The U.K. core CPI rate came in at 6.8%, the highest figure since 1992, significantly higher than the predicted 6.2%. The core CPI measures the changes in the price of goods and services, excluding food, energy, and tobacco. This means that gains in core prices accelerated by 6.8% last month, up from 6.2% in March.
This is the third consecutive month that the CPI figure has come in higher than expectations, indicating a consistent and concerning trend. The rising inflation and the possibility of a stalled economic recovery are likely to increase pressure on the Bank of England to keep raising interest rates in the coming months.
Bitcoin, which had been making gains earlier this week, experienced a 2% drop in the last 24 hours, trading below the crucial resistance level of $27,000. This downward movement effectively reversed all of Bitcoin’s gains from earlier in the week.
Other major cryptocurrencies also experienced the knock-on effect of this economic news. Ethereum (ETH), the second-largest cryptocurrency by market capitalization, traded at just over $1,800. Meanwhile, Solana (SOL) and Binance Coin (BNB) tokens reported nominal losses, according to CoinMarketCap.
Today’s market developments have demonstrated the susceptibility of cryptocurrencies to macroeconomic factors. With inflation on the rise in the U.K., traders are showing signs of caution, leading to a ripple effect in the digital currency markets.
Investors and market watchers are now keeping a close eye on the Bank of England’s next steps, as any decision on interest rates could further impact the volatile cryptocurrency market. As the crypto market navigates these tricky economic waters, the next few weeks will be crucial in determining the short-term future of digital assets.
