Understanding the Significance of the Surging US Inflation
The recent surge in US inflation has raised concerns and has implications for various sectors, including cryptocurrency. Ethereum, the second-largest cryptocurrency, has experienced a bounce back in its price despite the strong consumer price index (CPI) data published by the US.
The Impact of Bitcoin ETF Applications
Ethereum’s price recovery can be attributed in part to the filing of a spot Bitcoin ETF application by Franklin Templeton, a prominent financial services company. Other major Wall Street firms such as Blackrock, Invesco, Ark Invest, and Fidelity have also shown interest in launching similar funds.
These companies have implemented strict surveillance measures to prevent market manipulation, increasing their chances of gaining approval for these ETFs. Furthermore, the Securities and Exchange Commission (SEC) may want to avoid another contentious legal battle following Grayscale’s recent victory in a major lawsuit.
If a Bitcoin ETF is approved, it could have positive implications for Ethereum. These financial institutions would likely follow up with an ETF that tracks Ethereum, leading to increased investment in the cryptocurrency. Consequently, the discount of Grayscale’s Ethereum Trust (ETHE) to NAV has narrowed, and Cathie Wood’s Ark Invest has already applied for an Ethereum ETF.
The Influence of US Inflation Data
Despite the strong US inflation data, Ethereum’s price has continued to rise. The headline inflation rate increased to 3.7% in August, marking a significant uptick. However, core inflation, which excludes volatile products, fell to 4.3%.
These inflation figures suggest that the Federal Reserve may implement another 0.25% interest rate hike soon. Historically, Ethereum tends to underperform when the Fed raises interest rates. Prior to the inflation data release, analysts expected the Fed to pause its hikes.
Higher inflation rates also mean better cash returns. Money market funds are now yielding over 5.5%, making cash more attractive than Ethereum. Consequently, there has been an 11% decrease in the total value locked (TVL) in Ethereum’s DeFi protocols, such as Aave, Compound, and Maker, over the past 30 days.
Considering these factors, it is likely that Ethereum’s price will resume its bearish trend in the coming weeks.
How to Purchase Ethereum
If you’re interested in buying Ethereum, there are several platforms available:
- eToro: This platform offers a wide range of cryptocurrencies, including Bitcoin and XRP. You can also connect with and learn from other users or copy their investment strategies.
- Public: Public is an investing platform that allows you to invest in stocks, ETFs, crypto, and alternative assets such as fine art and collectibles, all in one place.
Considering the potential impact of rising US inflation on cryptocurrencies like Ethereum, it’s important to stay informed about market trends and make strategic investment decisions.
If you want to stay updated on the latest news and developments in the world of cryptocurrencies, check out Uber Crypto News. It’s a reliable source for timely and insightful information in the crypto industry.