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Bitcoin Drops After Powell Pours Cold Water on Inflation Expectations

A dramatically heightened inflation makes up the strongest bullish case for Bitcoin, a cryptocurrency that poses itself as the safest insurance against a potential rise in consumer prices and fiat devaluation caused by central banks’ quantitative easing programs and the government’s trillions of dollars worth of stimulus packages.
But on Tuesday, Bitcoin faced a headwind as it attempted to continue its yearlong upside rally higher. The cryptocurrency slid amid Jerome Powell’s testimony to Congress, wherein the Federal Reserve chairman emphasized that the $1.9 trillion stimulus package will not lead to an unwelcomed spike in inflation.
“We might see some upward pressure on prices. Our best view is that the effect on inflation will be neither particularly large nor persistent,” Mr. Powell told lawmakers.
Bitcoin attempts a rebound move off its intraday low. Source: BTCUSD on TradingView.com
Bitcoin…
…was trading just shy of $56,000 ahead of Mr. Powell’s testimony. But the cryptocurrency came under pressure after the governor’s comments about inflation, pointing to a short-term jitteriness among traders that based their upside theories on higher inflation.
That is due to Bitcoin’s core characteristics. The cryptocurrency comes with a limited supply cap of 21 million tokens, which gets halved every four years owing to a pre-programmed algorithm in its source code.
That makes Bitcoin provably scarcer than gold, its top rival in the safe-haven market, and the US dollar, the global store of value, which weakened by about 12 percent from its March 2020 high in response to the Federal Reserve’ …
Story continues on Bitcoinist

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