New US inflation levels have pushed BTC and ETH prices downwards below $21,000 and $1,600 respectively.
The latest US inflation report has drawn immediate reactions from the world’s leading cryptocurrencies Bitcoin (BTC) and Ethereum (ETH). This follows after a key inflation metric, the consumer price index (CPI) data was published, showing higher-than-expected figures. As opposed to the expectations of the crypto market, the year-on-year change recorded an 8.3% increase while the month-over-month increase was 0.1%. But those figures were earlier projected to be 8.1% and -0.1% respectively.
Furthermore, the core CPI also shows a 6.3% YoY increase. But even that was expected to be 6.1%.
BTC and ETH Record Losses
As it turns out, the hotter-than-expected US inflation levels have pushed BTC prices downwards below $21,000. The price of ETH also plunged below $1,600 as crypto tracked traditional financial markets lower.
As of publication, BTC is down by over 9%, trading at $20,299 per CoinMarketCap data. Similarly, Ether posted more losses in the past 24 hours, dropping to $1,564 on CoinMarketCap. However, it has since retraced and is now trading at $1,612.
US Inflation May Impact Fed’s Decision
The Federal Reserve is expected to announce another interest rate hike next week. However, a more aggressive approach is now more likely. This is because the CPI is a key metric that the Fed uses to decide its monetary policy. And now that the US inflation level is still not as favorable as expected, the Fed is not about to soften its hawkish stance.
Meanwhile, before the inflation news broke, traders were contemplating a 75-basis-point hike. However, according to the CME’s FedWatch dashboard, there is now a 20% chance that the Fed will hike the interest rates by 100 bps at next week’s meeting.
What This Means for Crypto
The last time the Fed implemented such high-interest rates back in June, there was a resultant crypto market bloodbath. And expectations are not far from this reality. In fact, the price movements of BTC and ETH since the inflation news broke might be an early indication of what to expect.
Also, the S&P 500 was down by over 4% at the time of writing as markets come to terms with the surprise inflation data barely a week before the Fed’s next decision on interest rates.
Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this.
He’s a reader, a researcher, an astute speaker, and also a budding entrepreneur.
Away from crypto however, Mayowa’s fancied distractions include soccer or discussing world politics.
Ecosystem
Research
News Network
About