Bitcoin Sinks After Hot Inflation Data—Sudden Turn In Crypto Market
The mood of today’s crypto market changed when the news of Bitcoin sinking surprised investors. Till yesterday, BTC was at its all-time high, but fresh inflation data and statements by US Treasury Secretary Scott Bessent put a stop to the rally. The excitement over the expectation of a looser monetary policy has cooled down for a while. This is not just a matter of price fall but a mixed effect of market psychology, policy updates, and investor sentiment.
Bitcoin sank more than 3% from its peak on Thursday, when the July Producer Price Index (PPI) came higher than expected. This unexpected inflation reduced the probability of a September rate cut by the Federal Reserve. At the same time, Bessent made it clear that the US will not purchase new Bitcoin yet for its strategic reserve but will use confiscated crypto assets.
Bitcoin Sinks Despite Record Highs—Break on Corporate Buying Trend
Bitcoin touched an all-time high of $123,500 per token on Wednesday, but the very next day headlines about Bitcoin sinking came. This rally was followed by an aggressive buying trend of corporate treasuries. Many public companies are following Michael Saylor’s Strategy Inc. model—taking a long-term bullish bet by adding Bitcoin to their balance sheet. Bitcoin is up 25% on a YTD basis and has jumped almost 57% from the April lows.
Another strong factor in this rally is the inflows into spot exchange-traded funds (ETFs). These ETFs have become an easy gateway for retail investors, as both liquidity and demand increased. But after the hot inflation data came, there was selling pressure in the short term.
Bitcoin Sinks Even After Trump Policy Push—Long-Term View Bullish
The Trump administration’s pro-crypto stance has been a major market driver. According to Tom Essaye, founder of Sevens Report Research, “The administration is pushing crypto. They are pushing Bitcoin. Bitcoin is the lead dog in the crypto market.” He says that in the short term the market may look a bit overheated, but long-term fundamentals are bullish.
Last week, President Trump signed an executive order directing the Labor Department to explore allowing cryptocurrencies and alternative assets in 401(k) retirement plans. If this policy is implemented, millions of Americans will be able to invest a portion of their retirement savings in Bitcoin. This could give a big boost to demand. Still, macroeconomic headwinds have paused the rally in the short term, as sentiment of Bitcoin sinking is prevailing.
Ethereum Also Down With Bitcoin Sinks Trend
The altcoin market was also not spared from the impact after Bitcoin sank. Ethereum (ETH), the second-largest crypto by market cap after Bitcoin, fell more than 3% from its near-record levels on Thursday. Wall Street’s bullish sentiment had been supporting ETH, but a shock from macroeconomic data also showed weakness here.
It’s a reminder once again in the crypto market that volatility never goes away. No matter how bullish government policies and corporate adoption are, a data release can easily reverse a short-term trend.
Opportunity for Long-Term Holders When Bitcoin Sinks
When Bitcoin sinks, short-term traders become cautious, but seasoned holders see it as a buying opportunity. With global adoption, institutional participation, and policy changes, Bitcoin‘s role as an alternative asset and inflation hedge is becoming stronger.
For now, the market mood is mixed—policy optimism on one hand, uncertainty of inflation data on the other. All eyes are now on the Fed’s next rate decision, which will decide the direction of the next phase.
Disclaimer:
This article is for informational purposes only. It is not financial or investment advice. Cryptocurrency investments are high-risk, and you should take any investment decision only after consulting your financial advisor.
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