The impact of macroeconomic factors on cryptocurrencies and bitcoin is increasing as inflation increases. Both the cryptocurrency and the traditional market are facing a severe storm. Many international bodies fear a possible global recession soon.
Another round of volatility has begun in the cryptocurrency market. The reason is the US Consumer Price Index (CPI) report. The data is at 8.2% for the September record.
US CPI data serves as a barometer for a country’s inflation rate. It records the change in the average price consumers pay for goods and services over time.
US core inflation hits 40-year high
A measure of the US Consumer Price Index revealed that inflation has exceeded many people’s expectations. The September record indicated the value had reached a 40-year high.
The Department of Labor provided more details about the report on Thursday, September 13. The core CPI, which excludes food and energy, is up 6.6% over the past year.
This value is the peak mark since 1982. Additionally, I note that from the previous month, the core CPI rose 0.6% for the following month. Thus, the overall CPI rose 0.4% in September to reach the high value of 8.2% YoY.
Remember that in August, CPI data rose to 8.3%. In June, the annual CPI peaked at 9.1%, the highest value since November 1981.
The latest CPI data increases pressure on the Federal Reserve to raise interest rates. With that said, the Fed maintained a strong stance in curbing inflation and lowered the rate to the desired target of 2%.
Thus, there is potential for another 75 basis points of interest rate increase by November. The Fed has already applied such rate hikes three times a year.
Cryptocurrency and Bitcoin fluctuations
The cryptocurrency market was in the red as most crypto assets lost value during the week. Prices are trending significantly south with little or no restrictions on the tokens.
Bitcoin has been in a state of constant fluctuation. Not only did the underlying crypto asset lose control of its critical level of $20,000, but its movement south has continued.
While it crashed into the $19,000 region, the underlying crypto-asset stalled for a few days around the level, but BTC later dropped below $19,000 to reach $18,500. This discrepancy has created fear and suspicion among many crypto participants. Some even highlight the signs of the token’s massive volatility.
At the time of writing, Bitcoin has shown little movement in recovery. The coin is trading at around $19,131.69, which indicates an increase in the past 24 hours. Its dominance over altcoins is 40.19%.
Featured image from Pixabay and chart from TradingView.com