Bitcoin and Ethereum Trade Sideways as Inflation Surges to 3.2% in July

Cryptocurrency prices remained stable despite a significant increase in inflation, according to the latest Consumer Price Index (CPI) report. The CPI rose by 3.2% in the 12 months through July, slightly lower than economists’ expectations. In June, inflation had slowed to 3%.

Cryptocurrency Prices Hold Steady

Both Bitcoin and Ethereum were largely unaffected by the release of the CPI report, maintaining their value at around $29,600 and $1,850, respectively. Other coins, such as Dogecoin and Solana, also experienced minimal movement, with less than a 1% increase.

Lucas Outumuro, Head of Research at IntoTheBlock, believes that CPI reports are gradually becoming less influential in the crypto market. He stated, “CPI prints are becoming less and less relevant for crypto and even markets in general. I think that we’re seeing the worst of inflation is behind us.”

Outumuro’s statement reflects the changing sentiment among traders who are now more confident that the Federal Reserve will be able to manage inflation without causing adverse effects on the economy. Last year, when inflation reached a high of 9.1%, both Bitcoin and Ethereum experienced significant declines immediately after the CPI report’s release.

Fed’s Fight Against Inflation

The Federal Reserve has been actively combating inflation by raising interest rates. Higher interest rates make borrowing more expensive, which helps cool the economy. However, this has also had a negative impact on crypto prices and stocks, as investors find short-term U.S. Treasuries and cash reserves more attractive.

The Fed’s long-term goal is to reach 2% inflation, a target it adopted in 2012. While inflation has decreased from last year’s high, Federal Reserve Chair Powell does not expect to achieve the 2% target until at least 2025.

Edward Moya, Chief Market Analyst at OANDA, suggests that the Fed might be willing to tolerate slightly higher inflation rates than their target. He stated, “They have policy reviews, and they might change what they have to do with inflation.”

Potential Impact on Fuel Prices

The next CPI report is expected to reflect a surge in energy prices, particularly gasoline. The national average price for a gallon of gasoline reached $3.82, up over 7% from the previous month. This increase is attributed to extreme heat and oil production cuts.

Traders anticipate that the Federal Reserve will keep interest rates steady until at least January 2024. According to the CME Group’s FedWatch Tool, there is an 86% chance that rates will remain unchanged at their September meeting.

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Editor Notes

For more crypto news and updates, visit Uber Crypto News.

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