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Breaking: Crypto Plummets As CPI Worse Than Expected

The Consumer Price Index shows an 8.3% YoY inflation, worse than the expected 8.1%. As a result of CPI, the crypto market is crashing.
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Breaking: Crypto Plummets As CPI Worse Than Expected

The consumer price index has just been released. The CPI points to an 8.3% YoY change and 0.1% MoM change. These are not the numbers that the crypto market was hoping for. The estimated CPI was expected to be 8.1% YoY and -0.1% MoM. A bad CPI is not good news for the crypto market.

As a result of the CPI data, Bitcoin and Ethereum prices are falling. BTC and ETH have both fallen close to 6% in a few minutes. The core CPI numbers are also worse than expected. The core CPI shows a 6.3% YoY increase, instead of the expected 6.1%.

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Why CPI Data Is Important To Crypto

The Consumer Price Index is an important measure of inflation. The Federal Reserve takes this data into account when deciding its monetary policy. The Fed is taking an aggressively hawkish stance to curb inflation levels. Fed chair Jerome Powell promised pain to households and businesses as the Fed curbs inflation. Traditionally dovish members like Neel Kashkari of the Minnesota Fed backed an aggressive stance.

A favorable CPI data could have helped in moderating the Fed’s stance. However, due to worse-than-expected data, the Fed will almost certainly continue to take an aggressive path. The CME Fed Watch tool reveals that the Fed will almost certainly raise the interest rates by 75 bps. High-interest rates due to CPI are not good news for the crypto market. A larger than usual interest rate hike in June led to a crypto bloodbath.

More importantly, there likely will not be any reprieve for the markets after September. Treasury Secretary Janet Yellen believes that inflation prices will go up in the winter due to a shortage of gas in Europe. Moreover, Cleveland Fed president, Loretta Mester, revealed that multiple interest rate hikes are likely.

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Can The Merge Save Crypto

The Ethereum merge is an extremely bullish event for crypto. Investors will hope for a successful merge as it can help rally the plummeting price. However, many crypto traders are betting against a successful merge.

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Nidhish Shanker

Nidhish is a technology enthusiast, whose aim is to find elegant technical solutions to solve some of society's biggest issues. He is a firm believer of decentralization and wants to work on the mainstream adoption of Blockchain.

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Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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