Several of the main cryptocurrencies fell this morning, as investor sentiment is still negative and as the market prepares for a key inflation report later this week.
Over the past 24 hours, as of 10:21 a.m. ET today, shares of the world's largest cryptocurrency, Bitcoin (BTC -0.24%), traded roughly 3% lower. At the same time, shares of the world's second-largest cryptocurrency, Ethereum (ETH 0.20%), traded roughly 2.7% down and shares of the meme token Dogecoin (DOGE 2.58%) traded more than 5% lower.
In a recent survey conducted by Bloomberg, 60% of the 950 investors polled about where they think the price of Bitcoin is headed said they think it will hit $10,000 in the not-too-distant future, while 40% believe it is going to go higher from here. The current price of Bitcoin was roughly $20,500 as of this writing.
"It's very easy to be fearful right now, not only in crypto but generally in the world," said Jared Madfes of the venture capital firm Tribe Capital. Madfes also said the sentiment in the survey is representative of "people's inherent fear in the market" right now.
The other thing investors might be thinking about this week is new data from the Consumer Price Index (CPI), which tracks a group of prices tied to common daily consumer goods and services. The market tends to use this as one way to measure inflation, which has been at some of the highest levels seen in four decades.
In May, the CPI rose 8.6% on a year-over-year basis, which came in higher than economists had been projecting and made the market question whether inflation had peaked. The longer inflation persists, the more aggressive the Federal Reserve will have to be with interest rate hikes, which creates a stronger likelihood of the economy tipping into a recession.
June data for the CPI will be released on Wednesday, and some economists think we could see a larger year-over-year increase than the May data, which could impact the market and cryptocurrencies negatively.
"The headline is expected to be higher. That's mostly because of energy," said Peter Boockvar, chief investment officer at Bleakley Advisory Group, according to CNBC.
Boockvar added: "The question is to what extent the moderation in goods prices is going to be offset by continued increasing services prices, predominantly driven by rent."
Many cryptocurrencies have traded more like tech stocks this year and have not fared well amid the Fed's aggressive rate hikes and reduction of its balance sheet. The price of Bitcoin is down more than 57% this year. Rising interest rates make safer assets like U.S. Treasury bills yield more, which makes risky assets like Bitcoin less attractive to investors.
While all cryptocurrencies are pretty difficult to value, I continue to remain bullish on Bitcoin in the long term due to the continued adoption of the token around the world and in the mainstream financial system.
I also really like Ethereum, given how much the smart-contract technology is resonating and being used in different industries. I would stay away from the meme token Dogecoin because it offers nothing special from a technical standpoint or a real-world use case.