Cryptocurrency: Bitcoin slips below $70,000 – concerns about inflation weigh

Dusseldorf. Bitcoin fell below $70,000 on Friday for the first time since August. Concerns about inflation and the prospect of higher interest rates are weighing on the cryptocurrency. The largest digital currency temporarily fell by up to 5.4 percent to $67,628, reaching its lowest level since August 19th. On Friday morning it was able to reduce some of its losses and was trading at around $69,000 in London.

The background is the interaction of various macroeconomic pressures that cryptocurrencies have been exposed to in recent weeks. High oil prices and high inflation have increased expectations of further interest rate hikes by the US Federal Reserve.

This week, a key indicator for US consumer prices reported another significant increase in October. The consumer price index excluding food and energy rose 0.3 percent from the previous month, exceeding expectations for the third month in a row. Overall inflation rose by 0.4 percent. The Fed is therefore likely to stick to its course and raise interest rates next month.

Jeff Mei, managing director of crypto exchange BTSE, says: “If the Fed raises interest rates by 50 basis points instead of the expected 25 basis points, Bitcoin and other cryptocurrencies could fall further.”

Investors also fear that the Democrats could regulate the crypto industry more strictly after their victory in the midterm elections.

From the perspective of Rich Rosenblum, co-founder of the crypto company GSR, the price losses in AI stocks and the strong dollar are also responsible for this. Some investors would therefore have had to liquidate long-term Bitcoin investments. In addition, the high inflation data and the change in management at Nvidia are also weighing on risk assets.

“As soon as it broke below $70,000, over a billion dollars worth of leveraged long positions were forcibly liquidated, leading to further selling,” said Sean McNulty, a trader at market maker AQC Tech. Ether, the second largest cryptocurrency, temporarily fell by up to six percent and slipped back below $2,000.