Cryptocurrency Prices Stagnate as US Inflation Rises
Cryptocurrency prices remained stagnant on Wednesday following the release of a report showing increased inflation in the US. The Consumer Price Index (CPI) rose by 3.7% in the 12 months leading up to August, slightly surpassing economists’ expectations of 3.6%. The index also saw a 0.6% increase in August compared to the previous month, primarily due to rising gasoline prices. Bitcoin traded at around $26,100 after the report, while Ethereum experienced a 0.5% dip to approximately $1,600. Altcoins like Cardano and Polkadot also saw minor losses.
Impact on Federal Reserve Decision
The Federal Reserve will consider various factors, including the US labor market’s strength and recent Personal Consumption Index (PCI) figures, when making its interest rate announcement on September 20. The Fed has already tightened its monetary stance in response to last June’s 9.1% inflation rate, the highest in 40 years. Higher interest rates can dampen economic growth and negatively impact cryptocurrencies and other risk assets.
Future Interest Rate Speculations
The possibility of the Fed maintaining steady interest rates after its meeting this month is currently estimated at 91%, with a 5% chance of a rate cut in January 2023, according to the CME Group’s FedWatch Tool. In August, cryptocurrency prices dipped following the release of the minutes from the Fed’s recent interest rate meeting, which revealed a hawkish tone and a focus on inflation risks.
Hot Take: Cryptocurrency Prices Remain Stable Amid Rising Inflation in the US
The recent report of increased inflation in the US had little impact on cryptocurrency prices, which traded sideways after the release. The rise in the Consumer Price Index (CPI) and the Federal Reserve’s response to inflation are crucial factors that will determine the future movement of cryptocurrency prices. As the Fed considers its interest rate decision later this month, the potential impact on the US labor market and other economic indicators will be closely watched. While higher interest rates have historically dampened the cryptocurrency market, traders are currently betting on the Fed maintaining steady rates. The cryptocurrency market’s stability amidst rising inflation reflects its growing resilience and maturity as an asset class.
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