US Inflation Numbers Hit 41 Year High: Here's What It Could Mean for the Crypto Market

The increased inflation numbers could send the crypto market into yet another spiral.

By Shomik Sen Bhattacharjee | Updated: 14 July 2022 13:40 IST

US Inflation Numbers Hit 41 Year High: Here's What It Could Mean for the Crypto Market

Photo Credit: Pexels

Bitcoin dropped to a 24-hour low within hours of the inflation news

Highlights

Bitcoin prices fell to an intra-day low within hours of the news
The White House claims that the CPI numbers are outdated
Cryptocurrency prices could see a further dip over the next few weeks

The price of Bitcoin tumbled on Wednesday evening after news that US inflation hit 9.1 percent in June, its highest rate in 41 years. Bitcoin dropped to a 24-hour low of $19,078 (roughly Rs. 15.2 lakh) at 6:56 pm IST following the higher-than-expected consumer price index (CPI) report that dropped at 6 pm IST, earlier than what was expected. With inflation all but guaranteeing further rate hikes from the US Federal Reserve, the mood among risk assets, as well as crypto, swiftly turned sour although price has recovered a fair bit since.

“Over the last 12 months, the all items index increased 9.1 percent before seasonal adjustment,” the Bureau of Labor Statistics report notes. “The increase was broad-based, with the indexes for gasoline, shelter, and food being the largest contributors.” The inflation increase in June was yet another record-setting spike as it rose at the fastest pace since November 1981.

After the CPI report was published, US president Joe Biden's administration addressed the subject. The White House also claimed that the data is already out of date and the CPI report does not reflect “the full impact of nearly 30 days of decreases in gas prices.” In fact, the White House says that “core inflation” has dropped for the third month in a row.

[Sponsored] Samsung Galaxy S24: The Ultimate Camera Phone With Smarter On-Device AI

The increased inflation statistics are seen by crypto specialists to have the potential to once again throw the cryptocurrency markets into a spiral owing to worries of the Reserve changing monetary policy.

On the other hand, if the Consumer Price Index statistics shock everyone by showing signs of a slowdown in the US economy, the cryptocurrency markets may see an upward trend. Stock, bond, and cryptocurrency markets all went into freefall once May's high inflation data was announced.

Following the release of the CPI statistics, the US Federal Reserve decided to hike interest rates at its June policy meeting from the 50 basis points indicated at the previous meeting, to 75 basis points at that time.

Magic Eden Launches VC Fund for Web 3 Games Named Magic Ventures

Already battered by the downturn over the past few months, the cryptocurrency market has struggled to regain footing in recent weeks. Following the collapse of the Terra stablecoin in May, contagion spread amongst major cryptocurrency funds and lenders, setting off a domino effect across the crypto industry as a whole.

Noise co-founder Amit Khatri joins Orbital, the Gadgets 360 podcast, for a special episode. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.

Affiliate links may be automatically generated - see our ethics statement for details.

Cryptocurrency Prices across Indian exchanges

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.