Bitcoin drops below $30,000, as hot inflation report causes investors to shun risky assets

The price of bitcoin fell below the $30,000 mark on Wednesday for the second time this week, after new data showed inflation is still running near 40-year highs.

Bitcoin fell about 7% to $29,196.10, according to Coin Metrics. Earlier in the day dropped as low as $29,026.66, its weakest point since December 2020. Meanwhile, ether was down 8% to $2,160.46.

Cryptocurrencies declined with stock futures after the Bureau of Labor Statistics reported consumer prices for the month of April jumped 8.3%, which was slightly higher than expected by economists polled by Dow Jones.

That spooked investors, leading them to exit risk assets including crypto. Cryptocurrencies remain highly correlated with the S&P 500 and, more recently, the Nasdaq Composite. Both stock indexes were lower Wednesday.

This is the second time this week bitcoin has fallen into the $29,000 range. Analysts have called $30,000 a key level for the largest cryptocurrency by market cap, and said it could fall even further if it can’t hold there.

This time last week bitcoin touched a recent high of $40,000 but quickly reversed the next day and has been steadily hitting new lows since.