Bitcoin spent much of early Friday below $65k after Thursday’s highly volatile trading day, which saw the flagship crypto-asset drop to near $64k.
Despite this, recent price patterns suggest upward momentum is slackening, especially as recent overbought signals appear on the charts. The pullback in BTC could continue in the mid-term, but buyers are likely to get back around $60k.
During the morning hours of Friday in London, the dollar had gained, setting itself up for the best week since May. Inflation higher than expected has investors betting that central banks will raise interest rates sooner than expected.
The U.S. Dollar Index for tracking the greenback’s performance in relation to a basket of other currencies rose 0.07% to 95.24 levels, just below the 16-month high of 95.267 index points.
It’s likely that the crypto asset will climb back to the all-time high due to the general upward trend not being broken.
Also on the horizon is Taproot, the first major upgrade to the Bitcoin blockchain’s protocol in years, which could propel the price of the underlying currency even higher. This weekend or early next week is when Taproot will be upgraded.
It appears that the growth of the world’s most popular crypto, at least in part, can be explained by the fundamental argument – that Bitcoin has become an inflation hedge – which has gained traction over the past few months.
Those who support cryptocurrency argue that digital coin supply limits make them immune from devaluation by a central bank or government that distributes too many.
Many economists had predicted that prices on everything from gasoline to housing would rise faster and be stickier during the last few months.
Inflation surged last month at its fastest annual pace since 1990, marking the pandemic recovery with high inflation as well as eroding consumer spending power.
The inflationary-hedge thesis has convinced some of the world’s most powerful financial brands to invest in Bitcoin. As proof of their claim, the yellow metal, typically thought of as an inflation hedge, has underperformed while Bitcoin has risen.