Crypto Prices Are Sinking After Recent Inflation Report, Here’s Why!
These past 24 hours, the crypto market saw a dramatic drop in prices after the U.S published its most recent data report of August’s Consumer Price Index was much higher than it was originally expected.
The U.S. Labor Department published its monthly inflation rate report on September 13th, in which investors saw the consumer price index (CPI) climbed to 8.3% in August.
Although this is lower than July’s CPI of 8.5% and June’s 9.1%, it’s still a considerably high number, higher than the 8.1% CPI that was predicted by most economists and analysts.
CPI Expectation 8.1%
CPI Reality 8.3%
What's your rate hike call?
— Ben Armstrong (@Bitboy_Crypto) September 13, 2022
Because of this, many in the community have been expecting another 75-basis-point rate hike, causing further bearishness within the crypto space.
The report also shows that this August, the core CPI, meaning the change in prices of goods and services for everything aside from food and energy, has risen to 6.3% in comparison to the 5.9% reported in June and July.
Naeem Aslam, an analyst at broker AvaTrade said that these inflation numbers have “made the situation a lot more difficult for the Fed who have been trying their best to tame inflation. The data has confirmed that the Fed’s bullets aren’t killing inflation and this is going to be a concern for many traders.”
Crypto Prices Down
Since the reports were published, the crypto market has suffered quite a loss, with some of the biggest cryptocurrencies in the space seeing big drops.
Bitcoin’s price, for example, dropped by $1,000 in a matter of minutes after the CPI report was first published. Despite seeing a rally that brought it to prices of $22,000 the past week, the number one cryptocurrency in the world is now back down and trading at a price of around $20,000 at the time of writing.
Ethereum, which has also been rallying ahead of its long-awaited Merge to Proof-of-Stake these next few days, also suffered losses as a result of the disappointing inflation rate data, with a reported 6% drop in its price in the past 24 hours. ETH is now trading at a price of $1,600 at the time of writing.
Other cryptocurrencies such as Cardano (ADA), Polkadot (DOT), Polygon (MATIC), and many others have also been seeing a downturn in their prices the past 24 hours.
Because of these massive price drops, some major companies known to have Bitcoin holdings, including MicroStrategy, Block, and Coinbase Global, were all shown to have suffered a 7% to 12% loss on their part.