Breaking: Mixed Inflation Data Fails To Start A Crypto Rally

Nidhish Shanker
September 14, 2022
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CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journal 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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The Producer Price Index for the month of August was just released. The data highlights a -0.1% MoM change in producer prices. It is also what most economists estimated the PPI to be. Meanwhile, the core PPI shows an MoM change of 0.4%, rather than the expected 0.3%. 

Since the release of the data, the crypto prices have gone up. Both Bitcoin and Ethereum prices have surged by 1% in the last 24 hours. However, this rally does not have the same strength as the bulls were hoping for.

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Why Inflation Data Is Important For Crypto

The CPI data released yesterday was not good news for the crypto market. The YoY inflation reveals that the market may have overestimated the reduction in inflation levels. The Federal Reserve was already prepared for a jumbo hike. However, after the bad inflation data, the market began to price in a 48% chance of a 100 bps crypto hike

The Producer Price Index is the change in price the producers receive for goods and services. It is another indicator of inflation. The Fed takes into account the PPI data before making its decision on the next inflation data. However, this PPI data may not be enough to change the Fed’s stance. According to @tedtalksmacro, a major crypto influencer, the increase of inflation in PPI might even be the bigger deal,

Key Fed officials backed taking an aggressive stance to combat the inflation levels. Cleveland Fed president Loretta Mester has backed bringing the interest rate over 400 target level. Neel Kashkari of Minnesota Fed, a traditional dove,  backed a Volcker-esque stance. Paul Volcker, a Fed president, raised interest rates to curb inflation, even at the cost of tipping the economy to a recession. 

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Will Elon Musk’s Deflation Warning Come True

With the PPI data failing to provide good news on inflation, the Fed is all set for a big interest hike on the 21st of September at the next FOMC meet. According to Elon Musk, such a hike will lead the US economy to deflation.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal 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.

About Author
About Author
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.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.