Bitcoin Abruptly Tumbles 9% to Just Over $26,000 Late Thursday, Raising Recession Fears

Bitcoin Abruptly Tumbles 9% to Just Over $26,000 Late Thursday, Raising Recession Fears

Bitcoin, the world’s largest cryptocurrency, abruptly tumbled as much as 9% to just over $26,000 late Thursday, according to CoinMarketCap. The sell-off came as investors continued to assess the risk of a recession and the impact of rising interest rates on risky assets.

The sell-off in Bitcoin accelerated after a report showed that US consumer prices rose 8.6% in May, the fastest pace in 40 years. The report raised concerns that the Federal Reserve may be forced to raise interest rates more aggressively in an effort to combat inflation.

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The sell-off in Bitcoin also comes as investors are growing increasingly concerned about the risk of a recession. The US economy is facing a number of headwinds, including high inflation, rising interest rates, and the ongoing war in Ukraine. These factors have led some economists to predict that the US economy could enter a recession in the near future.

A recession would likely have a negative impact on the cryptocurrency market. Cryptocurrencies are considered to be risky assets, and they tend to perform poorly during economic downturns. If the US economy does enter a recession, it is likely that Bitcoin and other cryptocurrencies will see further declines in price.

Here are more details about the factors that are causing Bitcoin to tumble:

• Inflation: Inflation is a major concern for investors, and it is one of the main reasons why Bitcoin is falling. When inflation is high, it erodes the purchasing power of fiat currencies, such as the US dollar. This makes investors less willing to hold onto cryptocurrencies, which are also volatile assets.
• Rising interest rates: The Federal Reserve is raising interest rates in an effort to combat inflation. This is also putting pressure on Bitcoin, as higher interest rates make it more expensive to borrow money to invest in cryptocurrencies.
• Recession fears: Investors are also concerned about the risk of a recession. A recession would likely lead to a decline in economic activity, which would hurt demand for cryptocurrencies.

Conclusion:

The abrupt tumble in Bitcoin is a reminder of the risks associated with investing in cryptocurrencies. The digital currency is still a volatile asset, and it is important to do your research before investing.

Investors who are considering investing in Bitcoin should carefully weigh the risks and rewards. They should also be prepared to lose money, as cryptocurrencies are a speculative investment.

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