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While the entire market is panicking over recent US inflation data, Binance CEO Changpeng “CZ” Zhao thinks it is still somehow ‘’magically low.’’ The consumer price index increased 9.1% from a year ago in June, more than analysts predicted.
Bitcoin briefly dropped below 19,000 minutes after the US Bureau of Labor Statistics reported inflation data. Nasdaq, Dow Jones, and S&P 500 also fell amid high inflation numbers.
Twitterati corrects Binance CEO over inflation measurement
Commenting on the inflation data, Binance CEO Changpeng Zhao wrote that 80% of USD in circulation were printed in the last 2 years.
On that notion, a 9.1% inflation is “magically low,” CZ claimed, questioning how the Labor Department could show such a low figure. He added we should be seeing 500% inflation given 80% USD are new = 5x of original supply.
According to CZ, inflation is solely calculated on the basis of increase in money supply over a period of time. Twitter was quick to correct the CEO of the largest crypto exchange. Inflation measurement also takes into account velocity, different supply and demand factors as well as where the monetary supply remains over that period of time.
Crypto personalities react to US inflation
Market consensus predicted June’s CPI reading at 8.8%, 0.3% less than what the US Bureau of Labor Statistics reported. The high inflation rate has elicited almost a similar response from all the major crypto personalities.
A slew of major crypto personalities, including Michael Saylor, Cameron and Tyler Winklevoss noted that the high inflation furthered the case for Bitcoin and crypto adoption.
But the crypto market has largely failed to retain its value through rising inflation this year, having slumped by about 70% since the beginning of 2022.
The high inflation reading now points to more sharp interest rate hikes by the Federal Reserve- a move that is decidedly negative for crypto. Bitcoin has so far reacted poorly to hikes in lending rates, taking the crypto market down with it.
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