Cryptocurrency Prices Staggered Due to Unfavorable CPI Figures
The CPI data was recently released. There is an 8.3% increase in YoY on the Consumer Price Index and an MoM change of 0.1%. And this was not expected by the cryptocurrency market; it had expected much higher volumes. According to the prediction, the CPI was anticipated to be 8.1% YoY and -0.1% MoM. And poor CPI data is bad news for the cryptocurrency market.
Consequently, the largest coins by market cap, Bitcoin and Ethereum, dropped in value. Both of them lost about 6% of their value in a matter of minutes. Bitcoin is now trading at $20,649, down from the above $22k. Core CPI data was not according to the prediction either. The core CPI data saw an unexpectedly large rise of 6.3% YoY against the predicted 6.1%.
Consumer Price Index is often used to track inflation. The information is taken into account by the Federal Reserve as it formulates its monetary policy. In a bid to curb inflation, the Federal Reserve had a hawkish tone. As the Fed works to curb inflation, Federal Chair Jerome Powell warned people and companies that they would feel the tinge.
To a certain extent, the Fed’s attitude may have been eased by more encouraging CPI figures. Nevertheless, the Fed will maintain its aggressive course in light of the unexpectedly worse statistics.
According to the CME Fed Watch tool, the Fed will likely increase interest rates by 75 basis points. The crypto market will not benefit from the higher interest rates that CPI brought about. The market crashed in June, followed by the unexpectedly high rise in interest rates by the Federal Reserve.
Furthermore, the markets will probably not get a break beyond September. Europe’s gas scarcity has also led to the prediction that there will be a spike in winter inflation, according to Janet Yellen, Secretary of the Treasury.