Nowadays it appears that historical inflation is driving up the cost of everything, and the cryptocurrency market is no exception.

Following the release of the June inflation data, which revealed that prices rose 9.1% year-over-year, the price of bitcoin and ethereum dropped dramatically Wednesday before recovering significantly on Thursday. On Thursday, bitcoin once again traded above $20,000, while ethereum was trading above $1,100; both prices had increased by more than 5% over the previous day. Investors may be wondering if bitcoin and other cryptocurrencies will continue to track with more traditional financial markets as in recent months or diverge in light of how badly U.S. equities were hit and how slowly they have recovered.

According to Martin Hiesboeck, head of blockchain and crypto research at Uphold, “a day after the release of the CPI, we have seen no massive bleeding in the market and no dump in bitcoin, which leads us to believe that we may have reached a sustainable level from which bitcoin can bounce back significantly.”

However, sellers are avidly monitoring to see if the June lows will hold, according to Edward Moya, a senior market analyst at foreign-exchange brokerage Oanda. Despite some indications of stabilization, the price of bitcoin is still declining.

It is unclear how continuous inflation will influence bitcoin and the rest of the crypto market, but increased short-term volatility is a safe bet. Bitcoin is the first and largest cryptocurrency, and investors and crypto experts have hailed it as an inflation hedge.

How Does the June Inflation Report Affect Cryptocurrency Investors?

This year, the larger macroeconomic factors supporting the U.S. economy, such as growing inflation, a wobbly stock market, increasing interest rates, and a probable recession, have had a significant and constant impact on the crypto market.

Another instance of macroeconomic issues confusing the crypto market was the most recent inflation data. In June, inflation reached a level not seen in four decades, despite experts’ expectations for a slight slowdown.

Back in June, it was believed that one of the main causes of bitcoin’s decline under $30,000 was May’s inflation statistics. The largest cryptocurrency momentarily had a similar problem last week, but it quickly fought its way back above $20,000, a crucial price milestone. After bitcoin, other cryptocurrencies did the same.

What has changed about this period, then? According to some analysts, the cryptocurrency market may be stabilizing after several months of decline, but according to others, this time around, substantial inflation may have already been included into the price of cryptocurrencies because so many traders and investors were expecting it. In other words, the market may not change considerably since investors will probably continue to be cautious so long as projections are negative. It’s difficult to tell for sure, though.

According to Marcus Sotiriou, an analyst with digital asset broker GlobalBlock, “when we get statistics telling us that inflation is convincingly inflecting down, that to me is a significant bitcoin bottom indication.” “Until inflation starts to decline, I would exercise caution,” the author said. “We have learnt that the Federal Reserve rules over risky assets like cryptocurrencies, and the agony of quantitative tightening may last for many more months.”

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What Steps Should Crypto Investors Take Right Away?

Now may be an excellent moment to buy in well-known, established cryptos, like bitcoin and ethereum, while prices are low, regardless of your level of experience with the market. Though keep in mind that prices could decrease even further.

Before investing in bitcoin or any other cryptocurrency, always do your homework. Consider your goals and motivations for investing in this unusually turbulent market. If utilizing a buy-and-hold approach, price fluctuations are to be expected, and significant falls are nothing to be excessively concerned about.

As long as your cryptocurrency investments don’t interfere with your other financial objectives, experts advise investing just what you’re willing to lose and limiting them to no more than 5% of your overall portfolio. Prioritize emergency fund savings, debt repayment, and retirement plan contributions before ever investing in cryptocurrency because it is a very hazardous and volatile asset.

With diversified assets like low-cost index funds, consumers are more likely to achieve long-term wealth and save for retirement, with cryptocurrency making up a relatively tiny portion of their portfolio.