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Red Hot Inflation Tumbles Ethereum By 5%

The US consumer price index, a comprehensive indicator of prices for goods and services used in daily life, increased to 9.1% over the previous year. The traditional and cryptocurrency markets have collapsed as a result of this announcement. Prices for the two largest cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), fell by almost 5%. It didn’t plummet as much, though, as was expected.

Ethereum Fall To Inflation

At the time of the CPI report, the price of the second-largest cryptocurrency fell as low as $1,019 per unit. Before the announcement, the price of ETH was fluctuating about $1,089 USD. It has managed to bounce back from the inceptive slump.

The price of ethereum has decreased over the past 30 days by about 15%. At the time of publication, the average price of ETH is $1,037.

ETH/USD hovers close to $1k. Source: TradingView

The data show that the price of bitcoin decreased to trade below the 19K price barrier. But to reach $31.8 billion, its 24-hour trading volume has increased by more than 14%. However, the initial decline in the price of bitcoin was reversed. As of the time of publication, it was trading at an average price of $19,317.

Related reading | Inflation Hits New 40-Year High, Will Bitcoin And Ethereum Plummet Again?

The last four hours have seen a liquidation of about $49 million in Ethereum, according to the Coinglass. While within the same time frame, Bitcoin had a liquidation of about $33 million. Solana (SOL) declared a liquidation of almost $3.43 million in the meantime.

Inflation Highest In 40 Years

According to reports, the June adjusted CPI annual rate was 9.1 percent. A projection of 8.80 percent was made. While the prior quarter’s percentage was 8.60%. But it’s said to be the biggest increase since November 1981.

The cost of food and energy are reportedly the biggest contributors to the increase. The probability that the Fed will increase the rate by a further 75 basis points in September is extremely high. Nasdaq futures decreased by almost 1.5 percent, S&P 500 futures decreased by 1%, and Dow futures decreased by 0.6 percent.

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Featured image from Shutterstock, chart from TradingView.com

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Negative CPI Report Causes Bitcoin Market Cap To Lose $15 Billion In 10 Minutes

For the month of June 2022, the US Bureau of Labor Statistics published its Consumer Price Index. The Negative CPI was found to be 9.1%, the largest inflation increase in the US in the previous 40 years. The Federal Reserve’s monetary policy is determined by the CPI, which is a reliable indicator of inflation.

Negative CPI Report Causes Bitcoin To Tumble

Prior to the release of U.S. inflation statistics on July 12, the price of Bitcoin (BTC) settled into a solid holding pattern, which ultimately added more negative volatility.

According to the latest CPI report for June, inflation in the United States reached 9.1%, which is the highest level since November 1981. This news only served to accelerate the downward trend in Bitcoin and the cryptocurrency market.

Following the release of the CPI, BTC falls by around 4% within ten minutes. Traditional market gauges like the S&P 500, Dow Jones, and NASDAQ are all sharply lower.

According to TradingView data, Bitcoin is currently trading at $19,180, down 3.45% on the day and 4.70% for the past week, with a total market cap of $366 billion. Notably, the flagship digital asset lost $15 billion from its market capitalization, dropping from $379.91 billion to $364.55 billion.

Bitcoin market cap at $374 Billion. Source: TradingView

The CPI for the previous month revealed an increase in inflation of 8.6% year over year, the highest level since 1981. The Fed implemented quantitative tightening monetary policies in response to extremely high inflation.

The entire crypto industry saw a severe downturn as a result of the Fed’s hardline monetary policy. The last ten years’ worst financial quarter for Bitcoin was experienced.

Related Reading | Wall Street Investors Expect Bitcoin To Hit $10,000, Is This Possible?

This revelation may have severe effects for the cryptocurrency markets, if last month’s CPI is any indicator.

Investors took a collective deep breath as the time for the release of the inflation statistics ticked down. The global markets remained calm, but as many prominent crypto trading analysts had hinted at the start of the week, an announcement—positive or negative—would be said to have a significant impact on the price of digital assets.

The United States Federal Reserve will be under even more pressure to raise interest rates as a result of the inflation statistics, which was much higher than expected.

More Pressure

Since Bitcoin has so far been unable to act as an inflation hedge, it has experienced a considerable loss in value this year, plummeting by around 72%. Along with other risk assets, Bitcoin has been severely impacted by the Fed’s monetary policies because it has always existed in a low-interest rate environment.

The Federal Reserve would be able to pull off a soft landing, so avoiding a recession while significantly raising interest rates, according to strong job numbers that were reported last week. Despite the fact that interest rates have been sharply climbing, this was the case.

Crypto traders and investors were heavily shorting Bitcoin and other cryptocurrencies before to the long-awaited data’s release because netflow to exchange-traded funds that give investors exposure to short Bitcoin reported roughly $15 million in inflows in only one day.

Source: Arcane Research

The founder of Eight Global, Michal van de Poppe, stated that the CPI will determine whether or not Bitcoin succeeds. The support level of $19.5K and resistance level of $19.8K present a significant test for BTC. Depending on the CPI, BTC is anticipated to experience a significant decline.

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Featured image from Shutterstock, charts from TradingView.com and Arcane Research

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Fed Announces Inflation Warnings As Bitcoin Whales Remain In Wait Mode

Over the past few hours, the price of bitcoin has deviated from a key level of support and fallen below $19,000. The transaction history reveals that many addresses purchased Bitcoin for more than $20,000. These market players would soon liquidate their holdings to prevent further losses, which would set off a decline toward $16,000

Inflation Warnings Affect Bitcoin Price

Due to major inflation worries and rate hikes indicated by central banks, particularly the US Federal Reserve, BTC has almost lost half of its value over the previous month.

Bitcoin’s market valuation has fallen from $1.27 trillion in November 2021 to under $366 billion at present.

Jerome Powell, the chairman of the Federal Reserve, reaffirmed the Fed’s commitment to raising interest rates in order to reduce inflation. He stated during the ECB meeting that the challenge of inflation was more concerning to him than the potential for rising interest rates to cause the U.S. economy to enter a recession.

“Is there a risk we would go too far? Certainly, there’s a risk,” Powell said. “The bigger mistake to make – let’s put it that way – would be to fail to restore price stability.”

BTC/USD falls below $20k. Source: TradingView

Powell argued that the Fed needs to quickly raise rates because a gradual hike may give consumers the impression that increased commodity prices would not go away. He said that rate increases might be lessened before the next year.

Related reading | Doom To Fail: Tether Shorts Pile In As Hedge Funds Seek To Profit From Crypto Winter

Following Powell’s remarks, U.S. equity market futures declined, with those for the S&P 500 dropping 1.59% and those for the tech-heavy Nasdaq 100 losing 1.9%. Asian markets were down, with the Asia Dow index and Japan’s Nikkei 225 both down 1.54%.

Data Suggests Whales Are Waiting

On-chain data on CryptoQuant suggests that most traders are awaiting the next significant price decline. The price anticipation appears to be for a short-term opportunity, though.

On-chain data also implies that big whales are waiting for a good opportunity to accumulate cryptocurrencies, not only tiny and average traders. Data shows that, interestingly, whales’ holdings in Bitcoin are not now growing.

This demonstrates unequivocally that the whales are awaiting a better opportunity. Whales’ holdings between 100 and 1,000 and between 1,000 and 10,000 Bitcoins currently exhibit a flat line.

Related reading | Bitcoin Slides Under $20K – Another Collapse In The Offing?

Featured Image from Pixabay and Chart from tradingview.com