Ok, now — time for a post mortem: how did this happen?
Well, on Monday, the US Bitcoin ETFs saw net outflows of $65M, bringing an end to a 19-day streak of inflows. This pushed the Bitcoin price down — cause when there’re more sellers than buyers, the price dips to meet that lowered demand.
What started it?
The fire sale was triggered by the market’s nervousness around today’s (yet to be announced) inflation data.
Cause if the data indicates inflation isn’t going down at the expected rate, the Federal Reserve will keep interest rates higher for longer.
(Making our loan/credit repayments higher → causing us to spend less → which hurts the economy → which hurts stock/crypto prices).
Good news is:
A higher than expected inflation report is now partly priced in to the market. So if inflation does come in hot, the worst of the sell-off could be behind us.
Better yet, if inflation is shown to have slowed — the market could rally!
