US Inflation Statistics Reach 41-Year High: What It May Mean for the Crypto Market

US Inflation Statistics Reach 41-Year High: What It May Mean for the Crypto Market

The rising inflation rates may cause the cryptocurrency market to spiral once again.

US Inflation Statistics Reach 41-Year High: What It May Mean for the Crypto Market

After learning that US inflation touched 9.1 percent in June, the highest rate in 41 years, the price of Bitcoin fell on Wednesday evening. Following the earlier-than-expected release of the higher-than-expected consumer price index (CPI) report at 6 pm IST, Bitcoin fell to a 24-hour low of $19,078 (approximately Rs. 15.2 lakh) at 6:56 pm IST. The mood among risk assets and cryptocurrencies quickly soured as inflation all but ensured future rate increases from the US Federal Reserve, albeit the price has since rebounded somewhat.

The Bureau of Labor Statistics report states that "during the past 12 months, the all items index climbed 9.1% before seasonal adjustment." The indices for fuel, housing, and food were the biggest contributions, although the increase was widespread. Another record-breaking jump in inflation occurred in June when it climbed at the quickest rate since November 1981.

The administration of US President Joe Biden addressed the issue when the CPI report was released. Additionally, according to the White House, the CPI report does not "represent the full impact of nearly 30 days of declines in gas prices" and the data is already out of date. In reality, according to the White House, "core inflation" has decreased for a third consecutive month.

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Crypto experts believe that the rising inflation data have the ability to send the cryptocurrency markets into a downward spiral once more due to concerns that the Reserve would change its monetary policy.

On the other side, the cryptocurrency markets can see an upward trend if the Consumer Price Index numbers surprise everyone and reveal symptoms of a downturn in the US economy. As soon as the high inflation statistics for May was released, the stock, bond, and cryptocurrency markets all collapsed.

The US Federal Reserve agreed to increase interest rates from the 50 basis points signaled at the previous meeting to 75 basis points at its policy meeting in June as a result of the publication of the CPI numbers.

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The cryptocurrency market has failed to recoup ground recently after being pummeled by the decline during the previous few months. Following the demise of the Terra stablecoin in May, a chain reaction occurred throughout the whole cryptocurrency market as key cryptocurrency funds and lenders were infected.

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