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Bitcoin collapsed by as much as 3.3% on Monday, after a bunch of traders decided to sell the cryptocurrency. It fell to $ 30,628, and this morning declined further to $ 29,600.
Obviously, risk appetite fell because investors are becoming concerned with the rapidly increasing cases of coronavirus caused by the delta strain. The Bloomberg Galaxy crypto index, which tracks some of the largest digital coins, even fell 5.7% and hit its lowest level in nearly a month.
Keith Lerner, chief market strategist at Truist Advisory Services, said investing in cryptocurrencies is based on confidence and liquidity, so having very little confidence pushed demand down very sharply. He also added that it is too early to say that they provide good protection since they are largely based on speculation.
Therefore, it is uncertain whether Bitcoin is a good hedge against inflation, although many fans argue that because of its limited supply, it could counter rising prices.
In July, the coin was down more than 10%, and its annual growth was reduced to just 6%. This means that the S&P 500 is ahead of it by about 9%.
But even though Bitcoin has been declining in recent days amid higher-than-expected inflation, it could still prove to be a good long-term defense.
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